Comstock Inc.
Q2 2014 Earnings Call Transcript

Published: 22 Jul 2014

[Operator:]

Good day, ladies and gentlemen. Welcome to the Comstock Mining Announces Second Quarter 2014 Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct the question-and-answer 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.

[Corrado De Gasperis:]

Thank you, John, and good morning everyone. It’s Corrado here, President and CEO of Comstock Mining. Welcome to our 2014 second quarter conference call. I am going to provide a brief summary of the information included in our press release from this morning and an overview of the financial that were filed on our Form 10-Q last night. I am pleased to say that this reporting cycle is our fastest to-date, shaving off another seven days off of what was already an accelerated first quarter of filing. I mentioned last quarter that we would continue improving on the speed relevance and timeliness of our external reporting, and this not only improves the quality and the transparency of our communications, but frankly it’s significantly reducing our both internal and external accounting and auditing cost, which is very important, based on what we’ve already achieved in the first and second quarter, in terms of these reductions, we’re targeting over 50% reduction in our audit and audit related fees from this year over last year. The important part of our cost reductions and it’s happening. I am also going to provide an update on the overall cost reduction effort and our outlook for the remainder of 2014, as our cash and cost performance has really turned the corner this quarter and positions us extremely well, in terms of our performance going forward. If you don’t have a copy of today’s release, you will find a copy on our website at www.comstockmining.com under news/press releases. I am also proud to say that we recently received a first place Safety Award from the Nevada Mining Association. This isn’t only a strong acknowledgment of our philosophy and our approach as Comstock responsible mining, but it’s also especially gratifying to our team as the award pertains to our very first full year of production in 2013. As I see it and understand it, Barrick and Newmont were the only other winners in the medium mine operation category, which represents mine projects sized between 100 and 299 employees and so it’s an incredible achievement for our whole team and really is reflective of the attitude and culture that we’re trying to build with the quality system. Before I move on, let me just remind you that in addition to the outlook, I may make other forward-looking statements on the call. Any statement relating to matters that are not historical facts may constitute forward-looking statements. The statements are based on current expectations and the statements are also subject to the same risks and uncertainties that could cause actual results to differ materially. These risks are and always have been detailed in the reports filed by the company with the SEC, the risks are also identified in this morning’s release and all forward-looking statements made during this call are subject to those same risks and other risks that we can identify. So with that let me briefly overview the quarterly results. We achieved significant progress in four primary focus areas so far this area. First, lowering our costs. Second, strengthening our balance sheet. Third, enhancing our mine plan and operations including the grades and the scheduling of all of that. And fourth, expanding our land position meter not only the actual expansion of the land, but the rezoning and the improvement of its character for more productive use released in tremendous so far more productive use, really has been tremendous so far this year. Our cash cost of mining for the second quarter was below 850 an ounce, despite challenging strip ratios so far this year that we’ve been talking about. This bodes extremely well for our performance in the second half of this year, as our rate of production in our strip ratios continue to improve. The cash incurred during the quarter for our operations, some of which expense, some of which goes in the inventory was at an all-time low for our operation. This is very important because we’re operating and moving as much are more material in total as we ever have. So we’re moving more material, we’re spending less money, we’re being more productive overall. We netted a small positive cash flow from operations this quarter, against the mining revenue from the sale of gold totaling $6 million. This is the most, probably the most important fact in our performance turning the corner from using cash in operations to generating cash from operations and again despite some challenging metrics in terms of the higher strip ratios. So we’re very, very happy to not only turn that corner and position the company for this kind of growth, but we’re doing it which still a tremendous amount of opportunity for improvement. Overall, gold and silver shipments totaled 4,645 ounces of gold and 48,621 ounces of silver, respectively in the second quarter, where silver netting us about $1 million and buy private credit. The ounces were slightly higher than last quarter, as we mined over 940,000 tons of total material. Strip ratios have finally begun to decline in July and we’ve laid out a production schedule for the next 12 months and we have visibility to a continuously improving environment. There is variation in that as we go, but on average and in total, we’re moving into improvements. On a grade perspective, gold and silver grades continue to improving and the weighted average for the second quarter was 0.034 ounces per ton gold and 0.546 ounces per ton silver as compared to the prior year, where it was 0.017 ounces per ton gold and 0.284 ounces per ton silver. Couple notable points there, the grades effectively doubled from last year to this year in terms of average performance that’s outstanding. And the ratio of silver to gold is actually up higher than 10

[Operator:]

Sure. Thank you. (Operator Instructions) Your first question today will come from James Dale, private investor. Please go ahead.

[Unidentified Analyst:]

Hi, Jim, how are you?

[Corrado De Gasperis:]

Fine, how are you doing?

[Unidentified Analyst:]

Hey listen, where we have the need for process for Dayton and Spring Valley?

[Corrado De Gasperis:]

So, a good question. There are two answers to that. I forgot to mention when I was giving the permit update. We’re about two or three months away from the environmental assessment that we currently have ongoing with the BLM to have our expanded haul road. I actually left that out on my prepared remarks, so thank you for saying that. I know that’s not your specific question yet, but let me just complete that thought. We’re looking towards November, December to have that finalize and that will authorize expanded and dedicated haulage for us, which will result in additional production efficiencies. The broader question on federal permitting for the district is still a little premature, we have to do some of the drilling that I just referred to on the east side, most all of the drilling that we targeted on the east side is on private lands. There is some amount that will be on federal lands and then from that results and that information, and I would expect that to be obviously since it’s July, that drilling will be done closer to the end of this year. We then would have the information that we would need to contemplate the feasibility or the foreseeability of a plan of operations. And so, I guess answering your questions specifically. The soonest that we could foresee doing that would be the end of this year or the very beginning of next year. It’s a very important object for us to get to that point. And so, from my perspective the permitting that we’re doing in Storey County is paramount, the EA with the BLM that’s going on right now is progressing very, very well without a lot of management time and attention. I think we’re moving into the final phases frankly. And then after the Lucerne permitting is done and some of that drilling is under our belt, the attention will focus to that objectives. So, all the things that we’re doing contribute to getting that at a point, but I think the last big piece would be assessing those results to drilling, assessing the potential plan of operations and then making that go or no go decision.

[Unidentified Analyst:]

Okay. So, basically from what I can impose, you still need to get some more information on the drilling and so forth from the Dayton and Spring Valley areas so forth, you actually step forward with inaugurating the [EA] for environmental impacts of the processes, is that correct?

[Corrado De Gasperis:]

Yes, and I would be even segment that a little bit. The substantial majority of the information I think that would be relevant with Lucerne base, Dayton is all private and Spring Valley does have some federal claims, but you know still probably a step further out in terms of, that – I don’t see a connection there between Lucerne and Spring Valley. So, it’s a just question of, I would say, the drilling that we have most immediately targeted for Lucerne.

[Unidentified Analyst:]

Right now, does the Dayton you say is a private property, is there a whole road in place that’s going to go through far more and to get through your processing plant or you going to say [ultimately]?

[Corrado De Gasperis:]

Yeah, so, the Dayton from a resource perspective is all private. The American Flat operating area is all on private land with extensive private expansion. There are private connectivities between the two, but not that we fully established yet and there are also some federal parcels in between the two. So, that’s a question. I don’t think that’s a question of this, I think it’s a question of exactly how.

[Unidentified Analyst:]

Well exactly what I am saying.

[Corrado De Gasperis:]

Yes.

[Unidentified Analyst:]

And...

[Corrado De Gasperis:]

So, yes, so, to the extent that it would...

[Unidentified Analyst:]

However you’ve got to establish what are we going to do if they – are we going to set-up another production?

[Corrado De Gasperis:]

Right. So that’s a good point. To the extent that we’re assessing a district-wide plan, right. Dayton as an standalone operation is private and that gives us multiple non-federal alternatives, but if there is a deemed best synergy with American Flat then there is, I can envision in my head already non-federal alternatives, but if the federal alternative is one that we deem would be most foreseeable, most practical, most efficient, all those words then it would be part of the broader plan of operations. And it’s important to say that as I just said, there is a handful of non-federal alternatives, but we still don’t even know what the mine plan is for Dayton and what the components of all that would be. So, there is still and I am not saying those are big or herculean obstacles, we just don’t know them yet.

[Unidentified Analyst:]

Okay. Thank you very much. Keep going.

[Corrado De Gasperis:]

Thank you, sir.

[Operator:]

Your next question will come from Stephen Shipman with Century Management. Please go ahead.

[Stephen Shipman:]

Good morning, Corrado. How are you?

[Corrado De Gasperis:]

Good morning, sir. I am fine. How are you?

[Stephen Shipman:]

Good. Two question, Corrado. In layman’s terms, the first one is in layman’s terms, can you walk us through how you’re getting from roughly 423 ounces a week now or this past quarter to about 750,000 in the fourth quarter?

[Corrado De Gasperis:]

Yes, absolutely. I mean it’s really simply the product now, the progression of the mine plan. And so we’ve completed mining the northern extremity of the Keystone in fact we already fully restored and reclaim that area for the mine, which was outstanding. We have completed the mining in the Hurford and the The Billy the Kid and we’re transitioning now down into the base of the Lucerne. And so the remaining production schedule we certainly for the next 12 months really reflects a picture of lower strip ratios continued good grade and all other things being equal, just increasing the rate of ore and what I can say, I guess this is the path, the silver lining in the high burden that we have been working through. If we’re doing a million tons in the quarter and it’s, the ratio is – let me say extremely like 800 to 150, 800 being waste and 150 being ore and that shift to 600 to 350 or 300, we have achieved it. So, it’s much more a function now of progressing to the better part of the mine plan. Previously that was what we needed to do, but we also needed to reduce our cost, we also needed to complete some of extremities, we also needed to get some of the reclamation started. So, I feel like the runway now in front of us, it is almost slowly, I am sorry almost solely the optimization of that mine plan and the implementation of those better aspects of the mine plan. I will admit even personally that it’s been frustrating working through some of these extremities and working through some of these higher strip ratios. There are still aspects of the mine, just because of its nature, it’s true nature that will still have higher strip ratios, but on average we’re going to stop, we’re going to do dropping it meaningfully, by magnitudes. And so, that’s really we have in front of us, having said all of that, we’re not satisfied yet with the efficiencies, they’re much, much better, we’re not satisfied yet with the cycle times in certain areas they are improving dramatically in others we have a meaningful opportunity to do more. So, I think that we’re going to meet our expectations in terms of the rate of ore and ounces. I think we’re going to exceed our expectations in terms of the efficiencies and productivities that can go along with it.

[Stephen Shipman:]

Great. And if we were to look at that mine plan or your business plans 12 months forward so, now we’re looking at 4Q ‘15 instead of ‘14, what run rate would you expect that?

[Corrado De Gasperis:]

Yeah, so, that’s great. Thank you for asking the question that way. I mean our view is that two answers to that. One is that, if we stay on our schedules and ahead of the needed schedule with the permit expansion. There are opportunities that where we can start better optimizing even the existing mine plan. So set a different way, the existing mine plans to the west and – but if we were able to expand the permit timely, we can start integrating schedules to the east into the existing schedules. And rather than thinking of the mine is a western component and an eastern component which are separate, that’s never been the reality will actually start evolving it to the East and integrating both optimal ore rates, but also efficiencies in design and logistics those will even be further enhanced by the new haul road, where the possibility of going from a 40,000 ounce rate to a higher rate will be right in front of us. Ultimately, I’m starting to migrate my thinking from tons to ounces to throughput and there are scenarios where even at 35,000 to 40,000 rate, we’re making a lot more money than scenarios we’re at 50,000 rate. So, the answer to your question is it can’t be much higher, 50% higher, right. And my view is, I want to ensure that the cash flow is 50% higher. We’re happy as the ounce rate is higher, we love for the ton rate to be lower. And one of the things we’re seeing clearly which is only a slight modification from prior discussions is that, obviously we have the capacity to double the rate of tons and double the throughput all things considered, we have scenarios where we don’t have to meaningfully increase the tons and we get more than double with throughput. So we’re starting to become a more sophisticated view of cash generations that we’re seeing in growth than just tons or ounces for that matter. So I think directionally that’s my answer to be much higher, 50% higher certainly but I don’t have the final production schedules and the mine plans to give really specific guidance.

[Stephen Shipman:]

Sure. When do you think your comfort level will be time-wise that as we work through the rest of this year that you can start allocating the excess cash into additional exploration, is that…

[Corrado De Gasperis:]

I’m going to, we’re going to know a lot in September. We’re going to know a lot in September and so we’re – the work that’s been done internally, both in terms of stabilizing the West, improving the West, optimizing maybe is the word for the West, but now extending those structures I mean there are the same and related geological structures to the East. We’ve made two significant 4As East, one around Donovan hill and all that area that’s frankly sits above the shoot zone structurally and then over up to the north of that to the Woodville area, the Woodville Bonanza area and the cross-sections in the structures and the geologies are tremendously exciting and it’s probably important to highlight that we know we have resource there. We drilled it, it’s measured, it’s indicated and it’s inferred and that’s an asset. We have it. But now as we start to really build out the cross-sections, the structures, not to adapt of validating that they’re there, but to adapt of formulating the mine camp for extraction. It’s looking better and better to the East. So I don’t want to overstate that, I don’t think I could overstate it from a geological excitement but from a – still a lot of work to do. I think one of the things we really have matured on is anybody can engineer an economic shale until you have feasibility and a lot of people can engineer very good mine plan that you can actually mine profitably So, we’ve matured into understanding what some of this specific obstacles are in an epithermal district, we’ve taken on challenges that actually mining some of what I would say are the most narrow and difficult aspects on the West, so it was almost like, it was on the job training not in a negative way because we were doing – we were learning and exploiting the geology as we hope to, but we just created stronger and stronger competencies to start figuring out even better ways to access it as we move east. When we move east though, it’s not a continuation of the same narrow challenging mine, you get some expansion, you get some space, right. And that will allow us more opportunities, I’d say more variables for optimization. So – and I made the point purposely that when folks come to visit the mine we’re really in a position to share this stuff. It’s individually in standalone, there is no problems with us sharing the details, but I think it really enhances, people’s understanding of the geology and then ultimately to that earlier question it will all come together and I believe that that just getting the expansion of the permit Historic County, and just progressing towards the broader engineered mine plan to include the east will allow us to record significant amounts of reserves, which I know a portion of the investment community is very keen to see. So, we’re tracking towards that again as end of this year beginning of next year, it’s going to be very tightly in that timeframe. So then we’ll be looking forward more than 12 months. And that’s what I am really looking forward to.

[Stephen Shipman:]

And final question Corrado, can you see any need for additional capital raise?

[Corrado De Gasperis:]

No, we’re in a good position, generating cash from ops. We’ve got good cash position on the balance sheet. We’re being very, very judicious in the allocation, very, very careful. I think that the care is just being extremely prudent in other words, we’re using logical sequences to not only determine the best use, but also when to deploy it most safely and that’s I think our rest of people are for sustaining all this and moving it the way we’re going. I think that and this is a great example of it, we already have the drill holes identified for the east. And I think that on a standalone basis that would rate as a fantastic program with great returns in terms of increasing the ounces in the ground and improving our mine planning ability. But the work that’s just been done in the last two or three months is just laser sharpen, where and how we best like to drill and where and how it would give us the most immediate mineable ounces following that drilling. And then getting the permit we’re already permitted to drill, but we’re not permitted to mine. So, theoretically we wouldn’t want to spend money in the ground until we’re certain that we could progress there and so we’re being very, very, very extreme in that sequence of diligence and I think that’s the way to not only get the best return on the capital but to preserve that and ensure we don’t do anything that’s inefficient. In drilling, the dollars are high, right and we’ve never been complacent about it, we’ve always had good productivity. But what I’m seeing is that good can become really, really good, really, really good can become great. So that’s positioning ourselves..

[Stephen Shipman:]

Okay. Thanks a lot, Corrado.

[Corrado De Gasperis:]

Thank you, sir.

[Operator:]

Your next question comes from the line of Danny, private investor. Please go ahead.

[Unidentified Analyst:]

Good morning, Corrado. How are you?

[Corrado De Gasperis:]

Fine. Thank you, sir.

[Unidentified Analyst:]

Good. I had several questions, but I’ll try limited, I got my tax hat on this morning. Did you guys honestly, obviously are you guys looking into the qualified domestic production activities deduction and the R&D tax credits, even though you’re not net profitable, are you generating these things for carry forward purposes?

[Corrado De Gasperis:]

Yes, so we haven’t, I’m very, very familiar with the R&D tax credit, and the beauty on the R&D tax credit side of it is the required documentation for obtaining that credit and the variables needed for that credit, we have in place, it’s almost inherently because of the extreme requirements of our technical reporting. Anything that we’ve done of our technical reporting, anything that we’ve done that qualifies as experimentation and new research, we can get for. We will have to document and apply for that assorting in a separate way, the only reason it hasn’t been a priority as to your point that we’re not currently in a net tax paying position but that doesn’t mean there is an ultimately some value there. I am not sure yet, what percentage of the actual development that we’re doing will qualify but I am certain that just by the nature of some of it, that it will and to your second area, we just commissioned a project and to be frank it’s in part because of our ability to shorten cycle times on the closing cycle, we freed up meaningful capacity of couple of our financial managers. So that the shift will be from closing, reporting Sarbanes-Oxley, NYSE listing compliance which we now have a strong handle on doing fast, to planning an analysis for other opportunities, both in terms of ensuring that we’re paying the right amount of net proceeds taxes, locally which is cash taxes that will actually start to pay in the second half of this year per our business plan and then starting to look at some of the opportunities for incentives, there is some incentives for building an expansion that we’re eligible, there is some incentives for job training and hiring that we’re eligible and then some of the bigger, broader ones that you refer to, we have a mini project called BIG that we’re looking at business incentive, grants and tax credits sort of a little bit more holistically. It’s not a big, big project, but it’s one that just requires some dedicated focus. As a separate aside, we’re also looking at now, because we got our 5013C status for our foundation, we’re looking at opportunity for grants that wouldn’t impact mining company, it would certainly impact some of the foundations work for restoration and preservation, which does impact the mining company because anything enhances the land and the land value certainly benefits the largest land owner. So it’s all connected, it’s not something that we had as a priority obviously but it’s something that we are now going to at least do a hard assessment of what the opportunities are.

[Unidentified Analyst:]

Sounds good and what about those commemoratives that you sold out, you’re going to go back to producing those soon?

[Corrado De Gasperis:]

Yeah, we asked that, we were driving towards an announcement in advance of this call, but I would say stay tuned for an announcement within the next week, we secured this our chain, in terms of ensuring that we could provide 100% certified pure compact silver commemoratives that we’re looking gold as well, but we’re going to start meaningfully with silver, we have a design for the Nevada 150 commemoratives. We don’t have some aspects of the state reflected and some aspects as a mining company reflected, essentially commemorating the compact loads rolled in Nevada becoming the state and celebrating its 150th. We’re going to be – we just announced and we’re going to be announcing more broadly a fund raiser for the foundation that will be a portrait and I am stunned by this but essentially every living governor, the full Nevada delegation in terms of our Senators Harry Reid and Dean Heller, Mark Amodei, our Congressman and another notable important people have agreed to pose in a portrait, in fact have all posed in this portrait commemorating Nevada 150, it’s going to be, the portrait is going to be entitled nine chairs for the silver state, it’s going to raise well over six figures for the foundation, but it’s also going to co-promote the silver coin, or the silver commemorative if you will. And so people will be able to buy the commemoratives in conjunction with this portrait that we’re selling 150 of them not coincidently, and then they will come with a commemorative but you can also buy the commemorative separately. I am sure after this call, I am going to yelled at for letting that cat out of the bag before the official announcement, but I don’t think it’s that fatal to anybody so.

[Unidentified Analyst:]

Well, thank you for all your hard work and dedication. You are doing great things.

[Corrado De Gasperis:]

Thank you, sir. I appreciate it very much.

[Operator:]

Your next question comes from John Leonard with Singular Research. Please go ahead.

[Corrado De Gasperis:]

Hi John. How are you?

[John Leonard:]

Good. Thanks. First off, congrats on a great quarter and continued progress.

[Corrado De Gasperis:]

Thank you.

[John Leonard:]

Two questions. First is the next 43-101 reports still expected to release in the first quarter of 2015, I think this will be a fairly significant catalyst as it would be formal and visible sign of your continued resource growth.

[Corrado De Gasperis:]

Yes, there is no questions that our next technical report will be in that timeframe and there is no question in my mind that it will reflect significant resource growth to the earlier caller and there is a question on this one, but we’re pushing, if we get these permit expansions and if we can get some of these deeper assessments done, I think it might reflect more than just a permit release source expansion and actually solidify the strong reserve profile and outlook for Lucerne though yes I agree with you wholeheartedly and I think we’re pushing for it even more complete update, but a resource update in itself would be extremely material and important to highlight.

[John Leonard:]

Okay, great. Thanks. And the second question is, can you provide some additional color on when you expect to reach that 40,000 ounce run rate and by extension the 750 ounce cash costs, I know you just mentioned you expect that in the second half of this year. So, we were looking at a late Q3 event or should we consider this a 4Q event?

[Corrado De Gasperis:]

So, I think it’s a fourth quarter event. Let me put three objectives in the same sentence, right. I think from our perspective. Number one, absolutely most critical get to full positive cash generation. Number two, get those cost below and well below 750 an ounce and I’d like to say that I believe both of those objectives will be achieved before hitting 40,000 ounces based on the performance that we’ve had and what we’re seeing now. And then the 40,000 will follow and that’s the one that we have, the control that we held that one, if I could say fairly is faster, we can get through the mine plan, it’s really that’s one more dependent on getting to the fast effective of the mine therefore the grade and strip ratio profile are such that we’re there. So yes, I would say fourth quarter for our plan, it’s right where it is but I’d like to achieve those financial objectives and I believe that we will before we get there. So and then it will just improve as we grow that revenue line.

[John Leonard:]

Okay, great. Thanks. That’s all I have and again congrats on the quarter.

[Corrado De Gasperis:]

Thanks, John.

[Operator:]

(Operator Instructions). The next question on the line will come from Robert Tucker, private investor. Please go ahead.

[Unidentified Analyst:]

Hello, Corrado.

[Corrado De Gasperis:]

Hi, Robert. How are you?

[Unidentified Analyst:]

I am doing well. I was just thinking about what you saw on that gold to silver ratio, silver being 63 or gold would have been 63 times the price of silver, I think that’s a bit on the line, what are your thoughts on that?

[Corrado De Gasperis:]

I think it’s way out of line, I think silver has been oversold, well beyond gold. I think that silver is potential for recovery is higher than gold. I believe that the minority of the financial community that’s been saying that gold fundamentally is oversold to that gold and financial markets and currency and monetary policy activities are supportive of gold are starting to prove right, I think that there is still a lot to see in that regard and I am not calling gold price for the second half of the year, but certainly I think there is a shift insentient, it’s not a full shift, it’s a beginning of the shift, whereas in December and January everybody was absolutely negative on gold and silver especially and now there is a shift and stabilization. I think that from a silver perspective which is particularly important to us, we are now moving, now that we have secured the supply chain that we can certify our own medal, a new business objective of ours is selling, the highest percentage of our silver possible in other than spot rate bullion. So, I believe that silver will recover faster to your question, I don’t know exactly when I don’t think 65 ratios are going to be sustainable in the market sentiments but I think that we’re going to move faster to get more for our silver than maybe even the market. So, we’re bullish on silver and we’re more bullish on what we’re going to do with our silver if that’s a fair way to answer the question.

[Unidentified Analyst:]

Thank you so much. I appreciate that.

[Corrado De Gasperis:]

Thank you sir.

[Operator:]

Your next question comes from Jack Albright, private investor. Please go ahead.

[Corrado De Gasperis:]

Hi, Jack. How are you?

[Unidentified Analyst:]

Good morning, Corrado.

[Corrado De Gasperis:]

Can you hear me? Hi, there.

[Unidentified Analyst:]

Yes, I can here you, thanks. Can you hear me?

[Corrado De Gasperis:]

Yes.

[Unidentified Analyst:]

Okay. Anyway, I just want to thank you and Comstock Mining your sale for one to 12 convention you have for us, you’re very informative and very good.

[Corrado De Gasperis:]

I appreciate you coming. We had a very large crowd at the Annual Meeting this year, well over 50 people, I mean maybe even 70 or more. We had Storey County come and speak about not Comstock Mining per se but about what they are doing as a county and as a community and it’s very exciting, it’s very partnering, it’s very supportive, and it was a pleasure to have you there, Jack.

[Unidentified Analyst:]

My greeting. My wife enjoyed that train ride, how fast she had the opportunities – wife and my wife said it was very informative more so...

[Corrado De Gasperis:]

And my wife said the same thing, it’s funny that you mentioned that and for everyone on the call after our Annual Meeting agenda, a large group of people including our wives took the V&T Railroad from Virginia City all the way around American Flat and not only if you get a bird’s eye view of the entire mining operation but you get the ride on a late 1800 steam engine and it was spectacular.

[Unidentified Analyst:]

It was and we enjoyed that. And get to the good stuff now, I think the last caller asked the same question way about further offering. Do you expect any in the future?

[Corrado De Gasperis:]

I’m sorry, say that again Jack.

[Jack Albright:]

Other offerings...

[Corrado De Gasperis:]

No, plans I think someone asked that question.

[Unidentified Analyst:]

Yes

[Corrado De Gasperis:]

That would be cash position, we’re moving positive cash from operations and improving from here forward, so, no plans for that.

[Unidentified Analyst:]

Okay. I know compare Comstock Mining with Newmont Mine quite a bit. Newmont Mine is quite high and the stock of $25. How can you compare yourself with them, are there any particular reason of doing?

[Corrado De Gasperis:]

Yeah, no, just one, we wouldn’t otherwise compare ourselves to them but the Nevada Mining Association announced the Safety Awards for all categories with miners, small, medium and large and we were – there were only three winners in the medium category for first place and I didn’t mention this earlier but the award for first place because they had no reportable injuries and so Newmont and Barrick have many, many project as you can imagine. But they have one each in our size category where they also had no reportable injury. So, from an industry perspective I am proud to be in that category and in that company when it comes to safety, otherwise I don’t have a lot of basis for comparing us to those guys, they are much bigger and global so.

[Unidentified Analyst:]

All right, that’s very true. I just wanted to bring up several times so not today we’re in the past. When do you estimate rail going into too much of forward statement? When do you think the stock will reach $2 or above?

[Corrado De Gasperis:]

I think it should be there now...

[Unidentified Analyst:]

I asked differently.

[Corrado De Gasperis:]

I think from a company performance, I think you’re going to see some meaningful catalyst in September, both with our permit expansions and our financial performance I think you’re going to see catalyst after September with our drilling and resource expansion and to John’s comment earlier I think in the first quarter you are going to see updated resource reporting and potentially even reserves expanding that will be very, very strong catalyst and should can tell us well beyond those numbers. So, without predicting the price and the timeframe certainly between now and January and February, we’re going to have a lot of news flow and a lot of performance to be talking about. So, I hope that bodes well for that question.

[Unidentified Analyst:]

Well, I hope so too. Okay, well that’s pretty all, I don’t know how to say that there one other comment, my wife want to ask when we took that train ride she cannot see the whole rock activity down there at the mine mostly talking about big trucks moving in and around,

[Corrado De Gasperis:]

Yes.

[Unidentified Analyst:]

So, that concerned her, the other mines (inaudible) in the past, it annoys her trucks moving back and forth when things happening

[Corrado De Gasperis:]

Yes. But that’s an easy answer well, that’s an answer. So, let me answer it, hitting all three phases of our production so, the Merrill-Crowe facility which you would have saw from the train runs 24/7 and its silence right it’s just the fluid flowing through the heap leach and into the ponds and you can be rest assured we’re running 24/7 processing ore and we’re pouring every single week so that’s for sure. The crusher by design right is oversized. We didn’t want to ever have our system be constrained by our crusher and the good news there and part of the reason we’re able to save cost over the last six months, is that we only need to run the crusher three days a week to keep up with the ore rate from the mine. And so, I’m sure that – I’m not sure to be honest if it was running or not that day because even the crusher from the train wouldn’t be something you could hear very well but you’d be able to see us loading the hopper. Third, and the most significant answer to your question is we’ve had days where because of the strip ratio, the 90% or 80% of the hauling and mining was contained to the actual pit, right. So, if you are driving American Flats, on a different day you could see a truck coming up the way every two minutes with ore. On that day, they may have been hustling and bustling in the mine, right not at the facility. So, you don’t have anything. You can assure that we’re running full, it just depends on what type of activity we’re doing on what day.

[Unidentified Analyst:]

Well the poor ratio [inaudible]

[Corrado De Gasperis:]

Yes.

[Unidentified Analyst:]

I see a concern but – trucks.

[Corrado De Gasperis:]

Yes, they were..

[Unidentified Analyst:]

I was referring...

[Corrado De Gasperis:]

No, question they were in the mine and just less frequently coming up to the crusher on that day. But we’ve had days where it’s the exact opposite.

[Unidentified Analyst:]

Okay.

[Corrado De Gasperis:]

All right.

[Unidentified Analyst:]

Okay, well. Like I said we really enjoyed our visit there and we thank you very much. You’re doing a great job.

[Corrado De Gasperis:]

Same here Jack. Thank you very much.

[Unidentified Analyst:]

Okay. Have a great day.

[Corrado De Gasperis:]

You too. Bye-bye.

[Operator:]

Mr. De Gasperis, we have no further question at this time.

[Corrado De Gasperis:]

All right. Thank you so much for the interest. Thank you for the attention and I look forward to seeing quite a few of you. I know we have seen some major institution scheduled to come and visit here in July and in August, and we’re looking forward to continuing on the financial improvement of the mine plan and talking to you again in the third quarter. Thank you all.

[Operator:]

Ladies and gentlemen, that does conclude our conference call for today. We thank you for your participation. You may now disconnect your lines and have a great day.