Comstock Inc. (LODE) Earnings Call Transcript & Summary

Oh, I've got control.

Yes.

Forward-looking statement comment. So as a company, we spent the last 3.5 years pretty excruciatingly restructuring through what was one of the more difficult times in the junior mining space, and I would say the gold and mining space overall. 2017, 2018, substantially all of 2019 were very, very, very difficult for the industry. At the end of 2019, the industry started seeing some life. And from all gold metric perspective, 2020 has been very strong in terms of gold. So coincidentally, we -- it's taken us this long to restructure the company, realign the company and position the company for growth. But we find ourselves positioned for that growth right now, and we have just spent a number of months finalizing a 3-year plan. And so the 3-year plan has a very, very precise goal to grow our per share value up to $500 million. We spent a lot of time looking at all of the pieces of what it would take for us to do that and that do we have sufficiency of components to deliver that value. And we believe the answer is yes. We're being even stronger on the concept of the $500 million in terms of translating it into a per share model. In our view, that $500 million will translate to a $12 to $15 per share result. I want to be clear that we believe that the 12 items that are listed on the screen in terms of executing the plan would be sufficient to get us to that $500 million. I also want to be clear that we've seen many, many instances where companies achieve specific objectives and the share price doesn't reflect that. So embedded, embedded in our performance objectives is not only achieving precisely these dozen objectives over the next 3 years, but it also includes building strongly on our shareholder base. And I want to say that -- I want to be specific about that. In the junior mining space, because of the capital needs of the industry, there tends to be a lot of bad characters that want to put money in front of you. But they're not -- it's not to be confused with investors who are actually bought in to the creation of $500 million of value. It's shorter money. I mean in some cases, a week is long term in their minds. And in some cases, you have to deal with those types of capital resources. In our case, we've had to deal with some of those capital resources. We believe we've dealt with some of the better types of those capital resources. But net-net-net, it's not what you want in your capital base. What you want in your capital base is investors who invest and investors who invest meaningfully and investors who see that meaningful investment grow exponentially. That's what we want. And so you probably have seen that we have great trading liquidity in our stock. I mean we can trade 1 million shares in a day. Yesterday, we traded 4 million shares. Shockingly, a few months ago, we traded over 0.25 billion shares. Here's the reality. The shareholder base isn't changing. We look at our top 30 today. We look at our top 30 yesterday. We look at our top 30 2 months ago. It looks very much the same. So there's a super good news and super bad news in that comment. We have a good, solid top 30. And then if you look at our top 5, [ Dan Shore ] being here today; John Winfield, not being here physically today; the Alvin Fund with George Melas, these are investors who have been with us for years. They haven't sold stock. They're the gold gem, right, of our shareholder base stability. On the flip side, we haven't added 5, 10 or 15 more of those types of investors. What I'd like to tell you guys is, and what I'll show you here in a minute, is with the elimination of our debt, with the introduction of growth of our mineral resources that's credible, with the introduction of clean mercury remediation cash flowing businesses, we're getting a tremendous amount of inquiry, a tremendous amount of inquiry about investing in the company. What's important is that inquiry is not coming from those other types of characters. When we're being called, and we get called now every day to ask if we want capital, and it's kind of a good feeling that we get to say no. No, we're not raising capital. We don't need capital. What we really need is now just to execute on our growth plan. And so either that's going to certainly turn away the bad character because their only way of making money with you is to do some transaction, and it's going to attract the people who hate that, first of all, and who actually want to just buy stock on the open market and hold it. And so we've put very formal mechanisms in place now and it's -- this is something that's going to be a priority from, let's say, January to August of next -- this will be a priority moving forward. But we're going to make it a heavy priority, Zach and I, the first 8 months of next year. We want to see detectable change in our top shareholders, which does not mean any subtraction. We don't -- the good news is we don't have these bad shareholders who want to hurt the company. We have good shareholders who want to see the company succeed, but we want to add to that pot. So when we add to that pot, we see the progression of going from $1 a share to $4 a share. We use that $4 a share number not because Noble has a 12-month target of $4 to $4.50 a share, but because we really see the inherent value that is there today that would translate to that number. And then as we grow MCU, as we grow the mineral resources in Dayton, as we finish off the monetizations of the noncore assets, which creates an incredible focus, then we unlock the $1 to $4. And then as we start to grow those resources further, as we start to add cash-producing units, then we're growing the value beyond that to the $500 million. The beautiful part of the plan is that if we achieve all these objectives in this time period, we believe we have created the value of $500 million. And as we build the shareholder base and they are buying into our incredible plan, we could -- we don't think we stop at $500 million. We think 3 years from now, it's just the beginning of a whole another growth profile, and that's what we believe translates into long term. So let me say, the first 4 objectives here are directly related to the Dayton resource. We want to establish the Dayton resource. We're going to publish a new maiden resource. We haven't published a technical report in over 7 years. This technical report will be S-K 1300 compliant. And for people who haven't followed that, the United States is the only major capital market that doesn't have formal guidelines from technical reporting of mining resources. They're the only major capital market in the world that doesn't have -- not only do they not have the formal guidelines, they prohibit the disclosure of gold and silver resources in their regulatory filings. So why does Toronto have a majority of the mining stocks listed there? Because Toronto has the National Instrument 43-101 guidelines that allows them to disclose resources. Australia has it. London has it. Frankfurt has it. The U.S. does not have it. We default to the oil and gas industry standards which are so extreme they do not allow resource disclosures, only reserves. So for the first time ever, the United States is not only allowing the disclosure of resources in our required filings, that means our 10-Ks, our 10-Qs, our S filings, but it's going to require you to maintain currency, maintain a current update of that information. And that's actually different than some of the other jurisdictions. It's better standard for our investors. So how many resource companies you know that have a technical report that was published 8 years ago, 5 years ago, 9 years ago? We will have to update those numbers on a routine basis and keep them current with the standards. But this requirement doesn't kick in until the 2020 -- I'm sorry, the 2021 year-end. And so it's not likely that you'll see a big flow of U.S. filers disclosing these resources, and we're committed to do it early, which will be for this year-end. So we may very well be the first company to be publicly disclosing resources in a U.S. filing as a New York-listed company with high and good liquidity in our stock already. Now in the past, someone would say the U.S. markets don't care. The U.S. markets don't invest in these kinds of assets very much. And I would say that was true, right? I mean it is a cause and effect circularity here. Why -- but then what's just happened? Ohio teachers has just announced a 5% allocation to gold. The Ohio teachers' pension is considered one of the institutional standards of U.S. investing. Warren Buffett puts in a $0.5 billion into Barrick Gold. So you're seeing a little bit of a paradigm shift here where the U.S. institutions who usually scorn gold are now allocating into gold, and the herd is following. You add good disclosure and good U.S. reporting to that and you set a nice platform going forward for credible U.S. investors to be coming into our story. We certainly don't discriminate against non-U.S. investors. We like all good investors, all keen investors, but I think you're going to see a major shift here. So our top category here is to establish the new maiden resource with the new S-K 1300 report. We intend to include that in this year's 10-K. The second thing we would do is then expand the Dayton and Spring Valley complex through exploration drilling and geophysical modeling. And I'm not going to steal too much from Mike's thunder in his presentation, but we already have a drill plan laid out, which we are now enhancing based on recent geophysical surveys, which are an incredible new technology. Then we're going to start developing through that drilling and through that development a fuller economic feasibility technical report, meaning we will probably see 2, 3, 4 technical reports associated with the Dayton. One will be a maiden resource estimate under the new regulatory guidelines, as I said. The second one will be drilling and development and expansion of that resource, so take what we have and grow it. The second and third one, we'll start to apply preliminary economics to the equation, economic shell. And I'm going to show you an example of one here in just a minute, but growing that economic shell. And then ultimately, it won't be the final report, but the ultimate milestone in this grouping is to get the full feasibility. Full feasibility means we have an economically feasible mine, we have proven and probable reserves and we have an NPV associated with the mine plan. So that's the first category. When it comes to investors and our credibility of what we have, we know what we have. Others don't know what we have, is you can go from an 8-year-old noncompliant, outdated Canadian standard technical report to a modern, current, regulatorily filed resource estimate of what we have today. Just there, it establishes a new base of value, and then we're going to grow that value credibly from there. The other thing is that we've accumulated somewhat discretely through these Tonogold transactions and through some other transactions a royalty portfolio, and the royalty portfolio is pretty powerful. We have a 1.5% royalty on the Lucerne Mine. Tonogold is working towards publishing a new technical report of their own on that mine and its NPV. We have a 1.5% royalty on the entire Occidental Lode claim, which is a 2-mile strike east of the Lucerne and heading north from there. We have a 1.5% royalty on the Gold Hill targets, which are represented by the Sutro Tunnel Company ownership. So right there, we have an incredible royalty base, but then we just acquired 25% of the company that owns Sutro Tunnel. And they have a 4% royalty on those claims. And those claims are some of the most prospective, high-grade, exciting exploration targets that Tonogold is drilling into as we speak. So just by having 1/4 of that, we had another 1%, so 1.5% goes to 2.5%, on some of the highest prospects of what Tonogold is going after. In addition, we have an option to buy the rest of the company and that royalty out, which would put us at 5.5% royalty on the most prospective, high-grade targets in that area. So we have -- we now essentially set up Comstock royalty as we will put all of our royalties into one entity, and we're already being approached by royalty companies about mergers, transactions, purchases. I mean it's pretty exciting. Anyone who's watched the performance of the precious metal industry, it's unequivocal that the royalty companies have outperformed everybody and their mother. And it's for good reason because they're financially steep. They're shrewd, right? And they deploy capital smartly, and then it returns big time for them. When you're in a stable gold price, they've crushed it. When you're in a growing gold price, it's breathtaking what possibly could happen. So that's our first category there. And those activities will span from the next few months, all the way to the third year. We will have 2 or 3 technical reports published. We will have this progress, and we will be reporting against it. We've always said and people have said, "Well, geez, you've been talking about this forever." We have been, except we said that we weren't willing to deploy the capital, right, until we had it readily available. And it's now readily available. Secondly, we're commercializing a global ESG compliant, very important comment there. ESG stands for environmental sustainable governance. So we have very specific, coordinated guidelines on how you do that. The beautiful part of our company is, in substance, we're already meeting all of these activities. In process and in governance, we're going to add some very, very important things to the equation, including reporting. But fundamentally, we are the socially, we are the environmentally, we are the sustainability company. We've already proven that through all of our actions, and now we're launching a company that is completely aligned with the UN's Minamata Convention to start to eradicate mercury globally from industrial mining practices. So there is a global commitment of over 140 companies to eradicate mercury from -- especially from these artisanal and small-scale miners, but abandoned mines, old mines, economically contaminating closed mines, right? There's thousands of them in Nevada alone. Can you imagine in California? Can you imagine in Idaho? Can you imagine all around the world? And so to not only build a cash-producing system but one that's socially responsible, one that's socially impacting, one that complies with all these environmental standards, you've opened up a whole new universe of investors to the company, whole new universe of investors to the company. And so the goals are to establish the efficacy of the Comstock unit, which means to prove unequivocally that we can get all the mercury out of the soil. The second one is to get the first project up and running in the Philippines. By way of status, the Comstock unit is up and running as we speak today, and we're heading to the Philippines in about a week. The equipment's already arrived. It's already delivered. It's already being set up. The next 2 months will be operationalizing it and starting to generate positive cash flow. And then within the next 3 years, we've set actually a modest goal of at least 2 more projects, right? So we could have 4 projects operating in this time frame. But I want to make the point, the Philippines is one project. We already know we're going to deploy 2 units to the Philippines, and we could have up to 6 or 7 units deployed in that one project. So when you think of each project, it isn't limited to one system. We could literally have 4 projects and have 20 units operating within that context. And then the last piece is more on the corporate side. We want to finish the monetization of these nonstrategic assets. We're really ahead of schedule insofar as it comes to monetizing the Tonogold securities. I'm going to spend an extra minute on that here in just a minute. We have about $12.5 million target of what were -- what was left to be monetized. We also now have contracts on the Silver Springs properties and the Daney Ranch in excess of $12.5 million. So we're going to monetize those nonmining hard assets. We're going to monetize the soft Tonogold securities. Right there, it's over $25 million, over $25 million. Let me pause on that and just talk a minute about what's happened with Tonogold. So there isn't -- there wasn't anybody 2 years ago that said, "I hate the deal. How could you do the deal?" I mean it was the opposite. "This deal is too good to be true. How are they ever possibly going to close on it? How are you possibly going to actually get any money from them? They don't have any money." And what we said is, look, they have a good plan. They have an absolutely solid club of investors that even represents their Board. So they're vested. They have skin in the game, and they seem to understand what they're trying to do. Mining industry is hard. Plans seem to always get delayed. Obstacles seem to always pop up. And to me, that's where you define the competency and character of the party that's working because when these obstacles and these things pop up, 80% of these teams usually go down hard. But then there are some teams that are scrappy, and there are some teams that somehow get over the obstacles. And it has as much to do with competence as it has to do with commitment. And when you see someone that's determined and committed and they're going to either achieve it or die, all right, well, we'll get behind them and see if they'll make it. So we closed in September, finally, on the sale of Lucerne. What did that mean to us? We recorded an $18.3 million gain. And it's important for people to understand that, that $18.3 million gain excludes the assumption of about $7 million of liabilities. It also excludes the notion that we get reimbursed annually $2 million a year in operating expense to this day and over the last 2 years. It excludes the $2 million upfront payment that they made to us at the very, very, very beginning. And so that gain results in us, "Yes, it's great. Nice. We generated net income. We're going to generate net income positively for the full year." What's really nice about it is we're not paying any federal taxes on any of these monies. What's also really nice about it is we still have $12 million of cash coming in the door, [ front end ]. What was surprising and very nice is on October 2, they surprised us and bought back at a 20% premium $2.6 million worth of stock that they had given us as part of the purchase. We immediately paid down our debt. So now our balance sheet, right now, as of today, has $48 million of assets, $48 million. That might be an all-time high. Liabilities at that same -- at 9/30, same time, was $6.6 million. Today, that $6.6 million is $3 million. So $48 million of assets, $26 million of them are current assets and $3 million of obligations. So what's gone from a very, very fragile financial position over a couple of years, frankly, is strong right now in large part, in very large part, because of Tonogold being able to deliver on the things that they said they were going to deliver. They also, in addition, owe us $4.475 million in a secured note on that Lucerne Mine, and they pay us 12% cash coupon every single month. That's $50,000 a month in addition to the $2 million that they pay us annually to reimburse our operating expenses. So what have we created? We've created a solid platform that's financially very, very stable and now the liquidity to fund the Dayton development and the liquidity to fund the MCU. And we're getting approached on royalties, and we're getting approached on other metal processing opportunities. So what we decided as a Board was that we would tie 100% of our equity incentive program to these performance objectives. Meaning, if we don't achieve the performance objectives, we get 0. So we are trying to align ourselves very, very strongly with our shareholders. You've seen buying, at the Board level, of stock. You've seen the Board concede to taking stock in lieu of cash for payment. And now we're saying that management wants to be 100% aligned. So what we've decided, subject to the shareholders' approval, is that if we achieve these objectives, we would vest 50% of our stock grant. Stock grant's about 3.5 -- little over 3.5% of the company's outstanding shares for management. It's a very good number in terms of management being excited about it, but it's a very modest number in terms of relative to what you might otherwise see in the market. However, if you don't achieve these objectives, 0. Number two, even if we do achieve the objective, let's say, we achieved all the objectives, we just hit the ball out of the park at every single one of these things and the stock price is not $12, 50% [ won ]. So in other words, we're saying half of it has to do with 100% performance, and the other half has to do with 100% performance. In other words, you have to perform by getting the businesses running, getting the cash flows, increasing the gold and silver in the ground. You have to perform. You have to do that. You have. If the market recognizes it, you get the other half. If the market doesn't recognize it, you don't. So it's fully aligned with the shareholders, which not only motivates us to achieve the objectives, but then motivates us to work our asses off to get the market to recognize it. And how are we going to do that? Detectable change in our top 30 shareholders. We have to recruit the right kind of good shareholders that want to be here and stay. We feel good about who's already there. We just need a lot more. And we have to be strong enough to say no to the ones that don't have the aligned motives. If you're not here to see us create these things, then we don't -- why are you here? We don't want you to be here. So just to give you some picture on that, this is a slide that I've been showing for 2.5 years. But the beauty of it is that -- and if you -- you can't really see exactly what it says. But basically, the second to the last column was the financial statements that we published yesterday. The last column is one step away from being debt-free and having $20 million of liquidity. Debt free, $20 million of liquidity. So our market cap's $34 billion. Our net book value is $45 million. It's the most undervalued scenario. Why? Because we're not building those new shareholders, and let me be very frank. In 2017, '18, '19, even if you had a great reserve and a great technical report, nobody cared. In end of 2019, 2020, people started caring about great reserves and great reports, but they still don't care about smaller nonpublished resources. So we have to publish a resource, and we have to grow it. We also have to build these other businesses like MCU to add to the stable. No obligations, $20 million of liquidity. So we realigned ourselves to reflect the focus of what we're doing in the businesses. We're one step away from finishing off those other assets held for sale. That's $12.5 million. We're one step away from finishing off the Tonogold monetization, the $12.5 million, pay off our debt, achieve our liquidity. And then focusing on these new businesses, at the bottom, you see in green, the mercury cleanup. At the bottom, you see in green, the royalty holdings. We already have these assets in place. We are now mobilizing and moving them forward. The platform is still in place. There isn't a conflict with Tonogold saying, we control the Storey County Mineral claims. They do. They own Lucerne, we have a royalty. They have a lease on the minerals, we have a royalty. We own the entire production facility, and you can't produce tons without paying us. So we've created royalty opportunity, revenue opportunity, cost subsidy/revenue opportunity. So we're not absent from the equation. We're central to the equation. That's the north. In the middle -- in the north, you have the mineral cranes. In the middle, you have Lucerne. In the south, you have this incredible 2-mile trend. Again, not going to steal Mike's thunder, right, but we already have an existing resource. We already have an existing a little bit outdated economic shell. But the outdated portion of that means we're going to be enhancing it as we change the precision and we change the economics of the gold price. And then we have this incredible permitted platform where we can operate businesses like MCU from a fully permitted, fully regulatorily supported situation. So when we talk about the components that we already have, we could easily come up with $120 million to $145 million value of just what we have today, and if we did nothing else, except do a better job at convincing people that it's there and we're moving it forward. That's over $4 a share. But we can see those components growing to over $500 million, and that's over $50 a share. At the bottom, we monetize $27 million worth of assets to pay off $5 million of debt, that's our $20 million plus of liquidity. It's all very, very precise. Tono has come in, in the north. What you see in orange is the Lucerne properties that they bought. So we say they bought Comstock Mining LLC, that's the entity that holds the Lucerne asset, and it has no other assets in it. Comstock Mining Inc. is the holding company. Why did we do it in Comstock Mining LLC? Because all the permits for Lucerne were in Comstock Mining LLC's name, and it would have been a nightmare to have to redo any of that. So we just sold them the entity, but the entity just has the Lucerne assets in it. So people are clear, they're focusing on Lucerne, which is the southern part of the county there. And the Occidental, that's to the east, it's the southern part of the Occidental load. But you see that Occidental load go up another 2 miles, so they have that whole trend of Occidental, they have the whole silver city road, which is the Lucerne there, Old Woodville. And then ultimately, what they've been publishing is an incredible thesis on drilling into the historic Comstock load. What's the thesis? It's very compelling. The thesis is that the old timers would only take 50 grams per ton or higher from their surface. It's unbelievable how high the grades were. We have documented proof -- they have historical documented proof of all of these grades and these cutoffs. Once the old timers chase that 50 grams down and establish an exploration drift -- which they didn't have drill rigs then, right? So they chase the 50 grams down. And once that was established and in place, the cutoff became 33. So literally, the old timers were knowingly leaving behind anything less than announced per ton. So we've gone through -- Tono has gone through an incredible amount of historical record. I mean, Kiersten Briggs, he was one of our senior geologists, now turned historian by many measures, and their team and their consultants have gone through massive amounts of historical production data. So they know where the data says, we left behind less than 33 grams per ton. And so they're not looking for the unfound bonanza. By the way, most people believe it's mathematically impossible that the old timers have found them all. I agree with that, okay? But they're not even going for that. They're going for the known minerals that were left behind. And there's a lot of them. And their drill program is laid out here. They're drilling holes in excess of 2,000 feet. We've never drilled a hole deeper than 1,200 feet. So they are literally drilling some of the deepest holes towards some of the highest targets. Let me remind you, we have a 5.5% royalty situation on all of this, substantially all of this. And they're drilling as we speak today. Now just switching quickly to to date, and that little blue pollywog that you see up there is the result of all of the drilling and work that we did in 2012, 2013 and the resource estimate that we put out in 2013 -- early 2013. But what we also did was a lot of geophysical work, a lot of structural work to follow that down to an almost 2-mile trend, even further. And then we did some drilling into that geophysical analysis and we hit on almost every single hole. We hit on some incredible high grades. We had a discovery hole, just 35 people on the surface at almost 1/4 of an ounce per ton. We had a second Genesee discovery hole, and these are all just coming south of the resource that we have already established. Mike is going to go into this in a little bit more detail, but we just recently completed a full geophysical survey of the district. Now what's different between that geophysical survey and this geophysical survey is that the technology in the first case was very near-surface and productive for us, right? But in the aerial survey, we now have the intelligence to go down 1,000, 1,200, 1,400, potentially 2,000 feet. That's unheard of. So Tono is drilling a 2,200-foot drill hole for the first time ever. We might be able to see geophysics down to those kind of depths. 2,200 is deep, okay? But if you think 1,000, 1,200, 1,500, that's incredible. And so we now have that data. So we will take that data and we will corroborate it with our drill program, and we will publish a new drill program that we intend to invoke in 2021. Now the economic shells that we have built before any of this additional work were showing values of $75 million to $100 million, depending on the gold price. If you use 1,600, it's $75 million. If you use, 2,000, it's $100 million. But I want to say that this economic shell was designed with a lot of artificial constraints and used the equivalent of an $800 gold price. So we're going to see a lot of pluses and minuses when we fix this thing, update it, integrate it. But it's going to be very precise, it's going to be very good. More importantly, we're going to have a clear road map on how to expand it. And Mike is going to show you all the work that's been done to do that expansion. Lastly, and before I turn it back over to Mike, I just want to say our proudest accomplishments have so far been tied to the environmental excellence that we've held ourselves to. We've gotten 2 of the top 3 awards in Nevada. Our company in getting those awards are Newmont, our Kinross, okay. We're not -- we're in a different class when it comes to this. We ripped out an entire length of state route. We ripped out about 300,000 tons of contaminated mercury material under the state route. We identified and sealed a 1,000-foot vertical shaft. We moved the road off. And we spent $9 million -- $6 million ripping out the road and processing all that material, $3 million to rebuild a new road, and we got over $9 million of gold and silver out of it. It was astounding. It was that achievement that drew MCU to us. That's when these technology companies started coming to us saying, "With your operating experience, with your permits, with your existing merger protocols and our technology, we could change the world here." And we agree. So that's what our system looks like. It's very impressive. It's very sophisticated. It has 3 centrifuges built into the complex. It has a mercury reactor and has the most precise spirals in the industry. Without using the mercury reactor, we're taking 60% to 70% of the mercury out. When we use the mercury reactor, our intention is to take substantially all of that out. Once we communicated that to the public, the game has changed. We're working with [ End-Up ] and with the regulators to use the cold vapor sampling process, which is accepted by everyone. So we're going to prove exactly how much mercury went in and prove exactly how much mercury came out, which is going to be a very, very small number. The low 11 parts per million means it's applicable to any use. The material can be used for anything, meaning it's clean. That's the system that's up and running right now on the Comstock, and that's the system that we shipped, has been delivered and is being assembled and ready for operation in the Philippines. And really, the Philippine opportunity, not only is it one of the richest gold districts in Asia, but it is absolutely by far one of the most mercury-contaminated places on earth. And the local partner that we have is as committed as we are to cleaning it up. And hopefully, within the next few weeks, it will be up and running. So what we've really done is we've developed a plan now. Hopefully, we're talking very, very little about collecting money from Tonogold. Hopefully, we're talking very little about selling non-mining assets. Hopefully, that stuff takes care of itself now within the next few months. And then all we're talking about are these 12 objectives over the next 3 years, right, where we can track precisely every step of the way. And our incentive and our motivation is 100% tied to the performance of the company's equity and what -- how this drives that. So I'd like to just pause to turn it over to Mike. As I reintroduce, Mike, let me just acknowledge that Larry Martin and Mike have been spending almost all of the last year completely reconstituting the Dayton level plans, cross sections and data from, not just the previous date but all of the new data that we had, except for the geophysical survey. And they've finally completed all of that ground-up work, and will be moving into the engineering of the new information as well as integrating the geophysics into it. And so it's with that sort of segue that I'd like to introduce Mike Norred to the group.

Thank you, Corrado. Can everybody hear me? All right. My name is Mike Norred. I'm the Director of Strategic Planning and Resource Development at Comstock. I've been involved in the company since 2007, worked through 2013. And then came back on in 2007 through today. I'm going to be talking about work that we've been doing on Dayton, the majority of which has been done by Larry, who I understand is on his way. His flight got diverted, and he didn't get in last night like he expected. Talking about Comstock Exploration and Development, which is the entity that controls the Dayton Resource area, approximately 2,900 acres in Lyon County, and it hosts multiple exploration targets. We talked about the Dayton Resource, but Comstock Exploration and Development also controls Spring Valley, the Gold Canyon Plasters, the Amazon Target and the Oest, which was a very high-grade mining area, pulling specimen, quality gold samples back in the day. So we're excited about the opportunities across the area. But today, I'm going to be talking about Dayton. What we're calling our Dayton Resource area. We've got 560 contiguous acres of private property, which makes whatever mining project comes out of this, easier to permit, being all private. The master plan and zoning support mining. And there's the man himself, Larry Martin. And we've been working on Dayton for a while. We acquired it initially in 2009. We've got 313 exploration holes in the Dayton Proper. Spring Valley, we've only got 28 exploration holes. And in 2014, we did 408 shallow holes with a blast hole rig just to look at near-surface mineralization. That drilling produced some tremendous high grades. Gold assays up to 2.95 ounces per ton. For the Canadians among us, that's 101 grams, which is pretty respectable. Silver assays up to 6.68. We've got third-party metallurgical column tests, showing 81% recovery on gold, very similar to what the test showed for our Lucerne property. And in fact, our experience with Lucerne ore show we got even higher in practice than the metallurgical and test predicted. So we have hopes to see the same. And the Dayton samples have also been tested for alternative that is non-cyanide processes. We're nowhere near to the point where we are going to pick the process, because frankly, we don't know how big it is. We don't know how much of it there is, so until we finish our modeling and a little bit of expansion. So the Dayton Resource area. We interpreted a series of east-west cross sections, and we -- by we, I mean, Larry, interpreted a bunch of east-west cross sections, and we learned that the economic mineralization is hosted in Cenozoic rocks overlying Mesozoic rocks. The main mineralized zone is between 2 divergent northwest faults. You see a highlighted zone on the West, that's the west boundary fault, which is identified by 100-foot down drop. But you can also see on this one that those northwest-trending faults that bound to the zone are broken up and offset by a series of North 50 East trending, North 70 East, Northwest and North-South faults. The ground is very broken, which is good for allowing mineralization. It's characterized by intrusive rock stack britches that make correlatable zones of mineralization, and you'll see that on the cross sections. And we've talked a lot about -- okay, where is it coming from? What are the feeders? And our current interpretation is that there are some ring structures peripheral to volcanic domes. The mineralization is coming up along those ring structures into this -- these fracture sets, and that's where the mineralization is coming from. So let's look at an example, the [ 43 700 ] section at the north end of the Dayton Resource area. It's highlighted on the slide. We started with each section doing plotting a cross section, all the drill hole data, the geology that was logged on those holes. And then Larry hand-drew his interpretation on the section, taking into account not only what he sees on this section, but what he saw on adjacent sections as well. And as we worked through the process, he'd often find something that he needed to explain, and he'd carried that back to the sections he had previously done. So it's a very iterative process, but it produces a rigorous model that honors the geology. So once Larry was happy with the section, we scanned it into the computer and digitized over-the-top of it to -- so now, we have a digital interpretation of that geology that we can use to produce a finished cross-section. And we can use that to target drilling, which I've got yellow highlighted. But on this one, I want to show you, we've labeled the zones. The stacked branches are the purple to tan. The BXD is our basalt britch dike. It's on the contact of the mesozoic basement rocks with the cenozoic volcanics. The BX is a higher-grade britch, which is the pink there, similar to what was mined in the stopes of the Dayton consolidated mines. And the BIQ is an upper britch zone, and PQ is, of course, porphyry-intrusive. The drill hole we've proposed in this section tests that possible ring structure feeder was trying to drill down and find out is it there or not. So 200 feet to the south. We repeated that for the [ 43 500. ] You see the same stack britches and intrusives. The AD units, the brown -- does it show brown up there? Oh, good. You never know what a computer color is going to look like until you see the final. The ID is intrusive dikes. They are typically nonmineralized. Although sometimes we -- in this, we find a mineralized vein along the margin of that intrusive. On this section, the highlighted yellow proposed drill hole is testing the down-dip extension of mineralization along that possible ring structure. Okay. We keep going another 200 feet to the south, stacked britches and intrusives. On this section, we see a dark pink that, unfortunately, I didn't get labeled. That's the BXU, the upper branch. But we also see what we're calling a BXM labeled a mega branch by [ Joe Cantor, ] a consultant from [ Barry Dolbear, ] what he saw it in the Dayton area. Here, again, drill hole is just projecting -- testing the zones of projected mineralization. Let's see. Same further to the south, same stack units, a more extensive zone, the the green unit is a zone of low-grade mineralization. We see that in a lot of sections. It's probably the mineralization from those structures bleeding out into favorable host rocks. The presence of that material in and of itself doesn't make a mine, but it's enough mineralization to help pay, to strip the mine and get it open. On this one, I've also just want to point out the bounding faults, the East and West, Northwest or one on the East and Northwest of 2 on the West, and you can see the down drop on that West bounding fall. On the 42,500. On this one, I've labeled the Dayton at it, where we first discovered that mega And I just want to point out that was a 90.8 foot zone, averaging 0.43 ounces per ton, just about 1.5 grams. So that mega branch is a fairly thick unit. It looks like there could be quite a bit of it, and it runs a respectable grade. On the 42,200, another 300 feet to the South. One interesting thing on this one is our proposed drill hole on the West. West of the bounding fault because we have some anomalous high-grade gold down in the mesozoic rocks. Typically, we don't see that. So we're hypothesizing some higher grade veins coming up through there. And so that drill hole is trying to test for that. Let's look for those high grade zones, see if we can connect them up. [ 41 750 ] again, further south. This section only has the shallow blast hole drilling. Typically, 150, 200 feet at best. And we're projecting the same stacked model, and we've got infill drilling to find out if it's there. And our Southernmost section is that we did the interpretation on is 41,300. It's just south of state route at the North end of Spring Valley. And so this is 2,400 feet south of where we started. So we've got mineralization over a pretty good distance already. We've proven it's there. This one includes our Genesee Discovery hole that you see plotted. It was drilled based on a geophysical anomaly from an earlier geophysical program. We encountered 225 feet, averaging over 1 gram per tonne with some higher-grade intervals in that zone. And it's the various intervals in this hole. This is one of the holes that established the concept of a stack sequence. And this one, the proposed hole just tries to fill in. It's a -- it's almost shooting fish in a barrel section to plot a drill hole because we have the wide zone with no information in it. Okay, so we've got all these sections, 49 of them, 50-foot apart. I'm showing just the 8 that we reviewed for simplicity, but trust me when I say, we've got one of these for every one of those sections. We can look at it in 3D. If you were in my office, I could spin it around for you, but the technological limitations here, you just have to imagine it spinning. We'll take the topo off of it to make it a little more clear what we're looking at, and you can follow the patterns. We also have repeated what you're looking at in section. We've connected the dots on levels to the section just the view just gets very messy trying to show it all at once. So obvious question is what's next? What's next for Dayton? Well, we need to complete the 3D interpretation, which is basically fine-tuning right now, going through the digitization, looking for problem areas, making sure all the dots connect, then use that 3D structural interpretation as boundaries to build a geostatistical model of the gold and the silver. We're going to integrate the 3D that Corrado talked about that, unfortunately, arrived last week while we were prepping for the meeting in our quarterly report. And so it's sitting there, and I haven't had a chance to look at it. Larry has been on vacation. He hasn't had a chance either. So we're looking forward to really diving into that, but we haven't been able to do anything with it yet. And all that leads into an SK 1,300, what's called an initial assessment, and that's what's required to establish a mineral resource under the new SEC guidelines. A lot of it will look familiar to anyone who's used to reading 43-101 reports. It's based at its heart on the same international standards. It's just got the SEC's unique twist on things like they often do. From that, and Corrado has said, and as you've seen, we have some proposed drilling already. But based on the technical report based on the geophysics, we're going to prioritize what the infill drilling of Dayton looks like and what the expanded drilling into Spring Valley looks like. And that's what we had to talk about today. I don't know, did you want to save questions to the end?

We can do a few question now. I'll open up the floor. You and I could stand together. Larry also is available. We'd like to do questions now, Zach, I think. Let me acknowledge -- before we go to the Q&A, I still do have a little presentation that I did in July on the gold industry that I'd like to share with you here quick. It's very intriguing. I think you'll find it fascinating. But I'd also like to acknowledge the arrival of the Inspector General. Clive, can you raise your hand back there? Welcome, welcome. We'll allow you a little bit more time. You may or may not need it, but we'll just do the Q&A part of this process first, and then we'll come back to the Inspector General. So Zach, I think we -- is it best to start with the live room and then move to the online questions?

Yes.

Okay. Can you please raise your hand and state your name as well, again, for the record, John?

[indiscernible]

Yes. Good question. So as of the -- I'm sorry, yes. So the question was -- I almost forget the question. The question was, what is currently the Tonogold holdings after they redeemed the stock? Is that correct? Okay. So as of September 30 -- answer it in 2 parts. We had on our balance sheet, $9.7 million worth of Tonogold common and preferred stock together. $9.7 million. They took 2.1 million of that out for $2.6 million. So the $9.7 million becomes $7.6 billion, $7.5 million, would be the right approximation of the value of their shares, their common shares. We no longer have preferred shares. So either we converted them all to common or they bought back some of those preferreds. We have about $7.5 million of common shares. We also have about $4.5 million in note receivable due the next 10 months. So it's about $12 million in total.

[indiscernible]

So two answers. The question was -- I'm sorry about that. Are we planning to hold that? So I think our strategy has been very consistent is that we do not have a strategy of investing in other junior mining companies. We are a huge stakeholder in Tonogold despite that, okay? Just to remind everyone, 1.5% royalty, we get annual reimbursements of $2 million, and we have a big lease contract with them when they go into production, so we're a big stakeholder. We're a bigger stakeholder than most of their shareholders regardless of our stock. But it's not our strategy to hold the stock. Having said that, we never ever tried to aggressively monetize it. To be honest, we were surprised when they redeemed the 2.1 million for $2.6 million was -- we weren't expecting that. It was a pleasant surprise, okay? And so we would look to very responsibly monetize it over, let's say, the next 12 months. That's within our plan, but we have no motivation to see their share price go anywhere other than up. Any other questions, please? Zach, do we have any postings?

Not really. None online.

So go ahead, please, sir.

[indiscernible]

Yes. Yes, great question. So I think the Sutro Tunnel Company and the Sutro Tunnel Company assets are an absolute like diamond in the rough, okay? I think it's a crown jewel compilation. We don't sort of overly exaggerate it in part because we've always had those properties leased, okay? But the difference between having a lease and owning them is we're paying the royalty versus where we're receiving the royalty, okay? So the purchase price is $3.75 million for the remainder of that, so that would give us all of the claims. It's a big, very powerful claim grouping in Gold Hill. It's some of the highest prospective targets in Gold Hill, number one. It gives us the federal grant on the entire Sutro Tunnel federal property and 1,000 feet of mineral rights on both sides of that, in addition. And there are also some claims in the Lucerne and Occidental area that are also Sutro properties. So for $3.7 million, we get all of that, and then we stepped into the other 75%, meaning the full 4% royalty on those core claims. Plus we already have another 1.5% existing already. So it's -- we think -- so the answer is yes. We fully anticipate exercising that option. We have about 10 months left on the first year. It's ultimately a 3-year option, but the price does go up after year 1. So I think we would -- liquidity being available, which it looks very much like it will be, undilutively, we would look to exercise that. And that will be a very powerful addition, not only to the asset base, but then to the royalty stream.

Corrado, I have an online question, please. How long until we can expect to start mining Dayton? Dot, dot, dot, positive cash flow?

Yes. Okay, so I'm going to assume that the positive cash flow question is related to Dayton and beyond. So there's a concept that's very real that if we made a go decision today, that we would be 2.5 years from starting production, okay? We had SRK come in and diligenced to hell out of that, and they actually concluded it was 2 years and a 6-month buffer, okay? So everybody has the consensus. There's very precise prerequisites, including some hydrological studies and including the special-use permit that would be required. But as Mike mentioned, it's all on private land and the permitting process is exceptionally shorter than it would be for federal property. Having said that, right, like everything that we're prioritizing from a capital allocation on an asset management perspective is prioritizing cash return and cash positive profitability. So we believe that the MCU unit, for example, in Philippines, and we believe this, in general, for the MCU units, there are about $1 million of equipment and maybe about $1.5 million in total. So $1 million in equipment, $0.5 million of working capital to get up and running. Within a month, they would be cash profitable. We believe that depending on the grade, the cash profitability could be $1 million a month on a unit, okay? So when we think about Tono, we think about cash coming in now. When we think about MCU, we think about cash coming in now. Dayton would require capital to get into production and it would be -- it's irrelevant if we would use existing facilities or new facilities. The beautiful thing about Dayton is even we put the capital in for a new processing facility, you're talking about a $20 million discussion or a $120 million discussion. So but the variable on Dayton and the timing to its cash flow, I mean there's a positive here in that -- it may take longer. In other words, as Larry and Mike keep expanding south and they keep expanding the resource, and they keep growing the reserve, then -- I mean you could have 2 years of just resource expansion which, in a completely sequential notion, would extend the start time 2 more years. You see what I mean? But it would be for positive, positive reasons. And when you think about 2 ways to create shareholder value, one is the cash return, sustainable cash return, cash return, cash return. The other is growing the value of the resources on the the ground. So we want to see immediate returns, either in cash coming back or in clear value increase of what's in the ground. And so we mean that with static gold price. We're not saying we're sitting here on ounces and we want to see the gold price go up. We're saying grow the ounces in the ground. So I like the cash flow model more than anything, but that second model is very powerful when you see what might just present. And I need 50 cross sections that have been done from the ground up by hand in detail, like inch by inch being now fully 3-dimensionally, geostatistically integrated into the model and then overlaying additional geophysical data. We have a road map that is unusually high, like unusually strong compared to other resources. We believe, when we publish this first initial assessment report, a lot of that information will become clear to everybody. It's not confidential to us, but we want people to understand the geology.

Okay. Corrado, I have another question from online. And this is from Mark La Reichman, a senior analyst with Noble Capital Markets. He would like you to elaborate on some of the strategic metal opportunities that we have been presented with.

So the question, do I have to repeat it Zach?

No.

So over the last month, and this came up on the conference call yesterday, we've had a couple of Board meetings debating the strategy. And the strategy has been very, very critical to our success in the last 2 years, like it's just extremely focusing. And we refer to it as a strategic focus because we said, look, we want to only invest in high-value, cash-generating precious metal-based opportunities, okay? And we did that purposely because -- in part because it's our core competency. But in part is the market was very confused about what we were. Conversation about are you a mining company or are you a land company? And is Tonogold basically stealing your thunder? Like all these confused questions. We said, look, we want to be very, very clear. We're not exiting anything that relates to gold and silver. And if you really follow the decision process, we haven't exited anything. We haven't exited Lucerne. We haven't exited Storey County. If anything, we've just reconfigured our how our capital is deployed to it and how our capital will return from it. It's very important to understand, and it's not understood in the market. Some people were confused by the Tono transaction, thinking we were exiting precious metals. So we made a super emphasis on precious metals because we did not want that core concept to be lost. And then we said we wanted to be commercially viable, meaning it makes money, right, and environmentally responsible. And then we have new technologies that are evolving associated -- MCU being -- not necessarily the best, being the furthest along, okay, furthest along. Now we've been approached. We've been working on some -- people know we've been working with Cycladex on using a different non-cyanide process. We've been working with Dr. Whitney and Itronics, of which there's still a high motivation. We've just had some outreach over the last 2 weeks to move some of that forward. Those are very good things, right? Like they -- if we didn't -- if they were dead, we would kill them, right? They're not dead. We're not killing them. But we've also been approached by some other mineral processing opportunities. One is a silver/zinc opportunity, credible. We've been approached for some metal reprocessing. And some of the metals are critical metals. They are strategic metals. And they're not precious metals, right? But we don't want to get involved in something where it's not our core competency. It has to be our core competency. It has to be metal-based. But when you look at a process flow, like Dr. Whitney or some others we've just been approached from outside the U.S., where you see crushing, where you see metallurgical vat leaching, where you see pressing and refining, we're like, well, that looks very familiar to us. We've been doing that forever. And so what we did, no -- there's no deals. There's no transactions, but we tweaked that strategic focus statement to, say, precious and strategic metals, okay? And so we don't have news to announce in that regard, but we're being approached in some things that are right in the square of our core competency. Almost always what we're talking about is either Northern Nevada-based situation, where we have the regulatory, political and social network very strongly in place, platform ready to go; or like an MCU, can be launched from Northern Nevada, but there's really no limit to the potential of where it goes. So that is -- it feels like a little tweak in the language, but it's probably a meaningful distinction. We're going after high-value, cash-producing, right within our competency. So we don't want to dismiss things that could be game-changing for the company and for our shareholders. We don't have any of that built in either to this 3-year plan other than the notion of being able to evaluate them and assess them.

So Corrado, I have another virtual shareholder question. It's a 2-part question. I'll ask you the first part, second part second. And you'll appreciate the second part because it does utilize the metric system. So when will the first MCU unit be producing in the Philippines? Followed by, can you go into more detail on why you need minimal grams of gold to make it profitable?

So great. Two great questions. The MCU unit in the Philippines is on site. It's been decontainerized. We sent the system over with, not only entire fully integrated system and metallurgical lab, but literally, with all the nuts, bolts tools and everything needed to get it up and running. We didn't want to have to worry about getting it up and running. Our partner in the Philippines, not only is a major mining activity that controls the claims along the river we're going to be cleaning up, but they're also expert in importing equipment, especially mining equipment from China. So our technology, our equipment comes to the U.S., the supporting operation will be lower cost, but quality Chinese supporting bulldozers, loaders, et cetera. And I think that within 4 to 5 weeks, that will be up and running Zach, so that's the answer to the first question. The -- every single unit, even though there's a core technology, which I didn't mention earlier, we filed a patent on. So that's a big update. We spent a lot of time, very excellent international global research on all the technology that's out there. We don't see anything like the mercury reactor-integrated system that we have. So but having said that, even though there's a standard component situation in the technology, every mine is different. You'd assess every scenario the way you would assess a mine. Like Mike Norred is just as competent in assessing MCU's economic feasibility as he would be to Dayton's economic feasibility, because a lot of the variables are the same variables, but they're different mine per mine, right? Meaning yield, meaning grade, right? And so you got some people trying to look for the 3 most important variables in mine economics, right. Because a lot of people will jump up and say, grade, grade and grade. So I love it when technology just comes to us and say, "Oh, my God, we have an amazing technology. And if we just had 20 grams per ton, we could process this profitably." Like anybody could process 20 grams per ton profitably, right? Who can process 1 gram per ton profitably? And that's a whole different discussion, right? So we already know the MCU unit is economically feasible at certain grades, but I don't want to make that sound like it's that big of a deal. It is kind of a big deal because some of the artisanal and small-scale miners, by definition, are doing high-grade, near-surface stuff, right? But the real answer to the question is, can you be profitable at 1 gram per ton, okay? And we believe, based on the metrics that we've assessed, the calculations that we've done, there are some assumptions, right, in terms of the yield, in terms of the consumption of certain chemicals and certain materials to say we could be profitable at a gram per ton. We ran some of our first models toggling between 1 and 2 grams per tonne, right? And they -- there was -- it was highly profitable. Obviously, if you change the variables from 1 to 2, it's just astounding, right? So -- but when you talk 1 to 2 grams, you're in a really lower-grade environment. So if you're talking about being economically feasible in this 1 to 2 gram per tonne area, you're hitting it, you're hitting a home run. If you then start stumbling across 7-gram-per-tonne material, you're just -- you're printing money. So I think, Zach, that answers the question.

Yes, thank you. No further questions online, and we are at 10:40. We do have time.

We do have time. Oh, good. So...

[indiscernible]

Yes. I believe they could be generating -- I believe they will be -- once they're up fully up and running -- are we generating cash within a month. And I think that within 2 or 3 months, the capital could be returned on the unit itself. And then it's profit for as long as you could run it. That's a very, very strong model that we're really proud of. Let me -- I think I meant to say something about Philippines for that last question. I didn't. See, the first unit we sent to the Philippines, it wasn't that it was certainly less sophisticated in the technological complex and the one that we have on the Comstock. It was actually a very high level of sand and gravel processing unit that was enhanced with some mercury controls because the first part of the area that we're going into is the silk in sand and gravel in the river and alongside the banks of the river, with relatively less mercury and also a smaller greater gold. The greater golds there could be 0.25 gram per tonne. Of 0.15 grams per tonne, very, very low, right? So we ran the model at 150 tonnes per hour sending gravel, and it makes money with no gold. Just on cleaning and selling the sand and gravel into the construction industry. We said, "Wow, that's a huge derisker for us." Then you put in 0.1 or 0.15 grams per gold and the numbers go 7, 8x from the profit you're already making, just with that tiny little bit of gold. So we can't be more precise yet because all we've done is model based on the assumptions of everything we know. But the practical experience of 2 or 3 months under our belt, we're going to be able to provide annual guidance, right? And I know that's what everybody is waiting for, and we just asked you to be patient. We haven't had any setbacks, right? It's just the process of commercializing something individually, except for the mercury reactor, all of these components have worked marvelously. And other components of other systems. The trick here is simply to get them all to work together in 1 complex system all the way through from front to end. If you looked at it and understood the pieces, you would walk away saying, "How could mercury possibly get out of the other side with these 3 or 4 mousetraps that you've built into this thing?" But the answer is, it probably won't, but it has to be run efficiently, right? It has to be run well with costs. If you -- some people are saying, "Well, what if we don't get enough of it out? Could we put it back through?" Yes, you could put it back through, for sure. You'll probably get the rest, but then it costs you like twice the amount of variable cost, right? So we don't want to do that. That's the type of thing we're going through now. Any question? Zach?

No further questions.

Okay. So I guess what I'd like to do a little bit of -- just a tiny bit off of the agenda protocol is turnover following the questions to the Inspector General. I guess, maybe making sure, Clyde, as the Inspector General, are you ready to report on the tabulation of the votes? So have all proxies then been received?

All proxies have been received and validly counted by Broadridge.

Okay. So let me formally be clear then. That the polls are now closed. And can you then make your report at this time?

Yes, sir. Based on the preliminary report of voting, there's a [ feed ] that will be certified by me. I wish to announce that directors placed in the nomination have been elected by a formal of a majority of the actual votes cast. The appointment of DeCoria, Maichel & Teague as the company's independent registered public accounting firm for the year ended December 31, 2020, has been ratified by majority of the actual votes cast. The nonbinding resolution relating to the compensation of our named executive office -- officers has been approved by a majority of the actual votes cast. And finally, the Comstock Mining Inc. 2020 equity Incentive plan has been approved by a majority of the actual votes cast.

Thank you, Inspector General. So I wanted to just say, I have one short -- very short presentation here on gold, which I'm also going to open up for questions after. But I don't know why. I've had some investors say to me, don't talk about gold, don't talk about gold, don't talk gold. You don't need to talk about gold. And so what I'm going to do is I'm going to formally adjourn the meeting, and thank everybody for all their time, patience and questions. But post meeting, which is like right now, I would like to take you through a presentation that I did last July. I've been a frequent presenter on the gold industry. And this presentation is nothing like that one. I just wanted to take a step back and an Austrian economic group out of Reno asked me if I would just present on gold with some basic information that most people might not know. And I did -- I do that, I'll do that. But then there's a lot of provocation about the gold price. There's a lot of debate about the gold price. And for the last 7 or 8 years, I beat my head against the wall to a lot of criticism, frankly, about will we ever see $2,000 gold? And if you've seen some of my other presentations, I blast that off. Like $2,000 gold is an inevitability. It's a certainty, okay? There isn't any question in our minds about $2,000 gold. The real question is, where is it going beyond that? And so I think given 2020 and given record-shattering $1 trillion deficits that I'm going to actually show you in a minute, the question is not $2,000. The question is where is this thing going, right? And I'd like to share some of my thoughts with you on that right now. So first of all, most people ask, how is gold measured, right? Well, gold is measured in troy ounces. Don't ask me why 1 troy ounce is equal to 1.09 regular ounces because someone just decided that, but a troy ounce is about 31 grams of gold. So when I was talking about the old-timers 33-gram cutoff, and they're literally -- their cutoff was literally higher than an ounce per tonne, which is remarkable. When gold reaches $3,110, so you're already going to get a hint for me as to where I think things are going, then 1 ounce of gold will be exactly equal in weight to $100 bill. So when gold gets to $3,110 an ounce, it won't matter if you have an ounce of gold or an ounce of $100 bills. 1,000 grams or 1,000 grams of gold and in this picture, the 1,000 grams is the last bullet there right next to the Swiss Army Knife is 32 ounces, that would be worth $61,000. So you're holding $61,000, right, in your hand, the size of the Swiss Army Knife. The gold bar that you're seeing displayed next to the stack of bills right there is a 400 troy ounce bar, okay? If there was a 400 troy ounce bar today, let's say, $1,900 gold, you're talking about $760,000. The bar weighs about 12.5 kilograms. That's about 27.5 pounds or equivalent of 3 1-gallon milk jugs. That's 400-ounce troy bar. You're holding 3 full 1-gallon milk jugs. It's heavy. It's pretty heavy. Gold is one of the heaviest elements. I'll talk about that in a minute. As an investment, gold has outperformed the market in the last 8 years. And it -- and the irony there is, the market's been up and gold's just getting started as far as I'm concerned. And people have tried to replicate golds, Rumpelstiltskin, et cetera, but it's never been successful. A tonne of gold, a tonne of gold. So I'm giving you some context with the pen and the knife there. A tonne of gold is worth $6 million. Gold has gone from $18 an ounce in $1,911 to over 1,900 this year over 2,000 this year. It's grown over 10,000%. A lot of fraud in the gold industry. There's a lot of conniving in the gold industry. One of the trends that you see in the gold industry, when you buy one of these 400-ounce troy bars is they're filled with tungsten. If you cut them in half and open them up, you see the blue element in the middle, right? And why is that? Because tungsten's atomic weight is the closest atomic weight to gold's atomic weight. So when people are weighing the bars to see if they're a full 400-ounce bar, you're fooling them with tungsten. It happens very frequently. The heaviest element is actually uranium. It has an atomic weight of 238.0289. Gold's atomic weight is just under 197. If you took a Chevy Silverado, with a max carrying weight in its bed of 3,670 pounds, right, it would barely hold the number of bars pictured in this picture without breaking the suspension, barely. So that truck could barely hold that amount of stacke gold bars. That amount of stack gold bars is 133 bars, about 1.7x, worth about $101 million today. Just giving you some context, okay? Just giving you some context. Central Banks typically handle the nation's reserves. Previously, the U.S. dollar was backed by gold as most of you know. Today, the dollar is not backed by anything. Actually, technically, it's backed only by the confidence of the United States and its ability to repay its debt, okay? Former Chairman Bernanke said that gold is only held as a tradition. So the Federal Reserve Chair said publicly, "Gold is only held as a tradition that gold is not money." He actually went on to say that like gold, U.S. dollars have -- only have value to the limit and the extent that they're strictly limited in supply, but the government has a technology called the printing press that allows it to produce as many U.S. dollars it wishes at essentially no cost. So to me, you've heard me say this before, at least this slide, that's the big lie. The last [ forward-scented ] -- forwards in the statement at essentially no cost. The reality is that every time the government prints money, they're taking a fraction of the dollar that's in your pocket away from you. They are diluting the value of the dollar that's in your pocket away from you. Okay? So when he says that essentially no cost, I mean it's an explicit lie, right? Or it's a ridiculously confused human being, right? Just going from 1913 to 2013, and again, I emphasize, we've had no more massive monetary dilution than in the last 7 years, quite frankly, than in the last 7 months. No more massive than that. This doesn't even contemplate that. We've already destroyed the dollar. We've already destroyed the relative value of the dollar. Why doesn't it feel that bad? Because every other currency in the country is doing the exact -- in the world is doing the exact same thing, which means we're headed for a rail -- a derailment, which means that the U.S. dollar will lose its reserve currency status, which means fiat currencies will lose value. People are scrambling to bitcoin to silliness, okay? Or they're just ignoring it. It's happened everywhere in history from the beginning of time and throughout every society has gone from stability, typically because of either military dominance or safe trade routes protected by that kind of governmental stability to then devaluing their currency to then destroying their currency. No matter if it was clams, rocks, paper dollars or otherwise. So there's absolutely no precedent for a civilization's money to survive it. It's never happened before. And what we're demonstrating is a highly technical, highly acute ability to destroy it faster. And people write books about it. New monetary theory. The monetary theory is, you could spend 80x what you make, and you'll be okay. So I -- there's a word for that, but I'll get in trouble if I say that line. So this semitruck full of gold has almost 25 tonnes.The legal carrying weight of the truck would be between 22 and 25. Carrying just under 25 tonnes, that's worth $1.6 billion. Talk about a heist. That would be fun. A couple of years back when gold was less valuable, a B2 bomber was literally worse its weight in pure gold. A B2 bomber was $2.1 billion, which would have been equivalent to 33 tonnes of gold at $2,000 an ounce, okay? So it won't matter if you have that truck with all the gold, that truck with the paper or that B2 bomber, it's all the same valuation, $2.1 billion. So here's is where I say is beginning of the end, right? The U.S. gold reserves are 8.1 tonnes. 8.1 tonnes is the official book -- the official gold reserves that the United States is holding in its federal bank. It's currently on its books at $11 billion. If you put a $1,900 gold price on it, the value is actually closer to $0.5 trillion. So the government has $11 billion asset on its books. Some people don't know if it still exists or not. But in today's dollars, it would be worth $0.5 trillion. In '33, the government criminalized gold possession. I don't know if any of us were around, but it was a criminal act, right, to hold gold. The Federal Reserve know, actually still sitting on it redeemable in gold, but if you did that, you'd go -- gets one in jail, right? So that's kind of ironic. Arguably, what the criminalization of gold is what the Federal Reserve is currently doing with our paper money. So this is a picture of what all of the U.S. gold reserves would look like if they were laid out in those same 400-ounce troy bars. If you take all the governments in the world, this is what you're looking at with obviously that highest peak. It's not visually clear, but that's the 8,133 tonnes that the U.S. government has. So today, officially, formally, the U.S. government still has the most gold backing it. So Bernanke is not right. We are on a gold standard. It's just informal, right? Why would all these governments hold gold? Why would all these governments currently be buying and adding gold to their reserves, which they all are, right, if it was just tradition? That's asinine, okay? That's clearly -- the actions are not consistent with the words, is what I'm saying. Now I've heard from a number of sources, and I can't validate it, that the U.S. government started buying gold again. So they won't allow it to be audited. You don't know if it's really there or not, but the rumor is that for the first time, under Mnuchin's treasury, we started buying gold again, which I can't validate or invalidate. What I can tell you is that Nevada as a state is the eighth largest exporter in the union. Now I'm saying exporter. I don't mean out of the state, I mean, out of the country. So Washington with airplanes, this is 2017, but okay. Texas with petroleum, Louisiana with petroleum. Largest exports in the United States. Our largest export business. Nevada was #8, with $6 billion worth of gold. What's stunning about the number is not that it's so big. It is. Is that every single ounce that we produce leaves the country. Now $6 billion represented $1,300, $1,400 sort of gold price. At $1,900, the same amount of ounces, will be about $10 billion in 2020. We will export $10 billion out of the country. Now you talk about strategic metals. You talk about strategic minerals. How is gold, not the most strategic? How is it not? The answer is, it is to China. The answer is, it is to Russia. It is to almost every other Central Bank in the world, but we have this paradigm that we don't need gold because we have the reserve currency of the world. And you know what? There's a limited truth to that if you don't destroy that currency. So when I look back and -- at some of this, what was stunning to me in February of '18, we exported 15x. In February of '18, China imported 15x. So the net effect of what we're talking about is Nevada, not the United States, Nevada, right, is exporting the wealth of our nation, almost bar-for-bar to China. Chinese don't export gold. U.S. exports 100% of its gold. I'm -- just a fact. So who's winning the currency war, okay? We're happy to throw those treasury bonds over that net. But -- oh, I'm sorry, we're happy to throw the gold over that net, and they're laughing all the way to the bank. And if you just follow the money, Russia and China have been among the biggest buyers of gold for 8 years in a row now. 8 years in a row, they're building their gold reserves. Here's the most stunning thing. I've done this presentation, you've heard me say we're at -- we have $1 trillion deficit, like $1.5 trillion deficit, 2010, 2011, 2012. It's not going to last, right? The economy is going to turn around. So all right, let's look at the turnaround. What does it look like if we're at less than 5% unemployment? What does it look like if we're at 3%-plus GDP growth? And those are numbers, I would say, whoever is going to see that again? Well, we were seeing that. We saw that in '17. We saw that in '18. We saw that in '19. Guess what, a $900 billion deficit. You're still pushing $1 trillion in a great economy, $1 trillion deficit until COVID hit. I listed up here the series of government bailouts that we've already experienced. The range depends on if we're going to do another one or not, but we're looking at a $7 trillion to $10 trillion deficit. We're talking about one. We're looking at a $7 trillion to $10 trillion deficit. Well it doesn't scare me. What scares me more than logging a $7 trillion to $10 trillion deficit is the paradigm that seem to shift. Like the Republicans and the Democrats have bought in. That doesn't matter how much money we spend. This new modern monetary theory they seem to be silently accepting. Where is the fiscal discipline? Now you could say, look, you already got me now. It's a crisis. It's a pandemic. We got to do it. Sure. I don't disagree. Then $3 trillion in a month's. We can do it. Do it, okay? But where does it stop? You've changed the mindset. There is no notion of fiscal responsibility or discipline. I remember when green -- when the Fed Chairman Greenspan would go congress and say, "Look, I can work on monetary policy. But if you don't have fiscal policy, it doesn't matter." You -- Have you heard a Fed Chairman say that in the last 2 or 3 [ admins ]? Nobody cares. Do whatever you want. With Trump, it's gone a whole another level. Like the notion that there is even independence has gone, okay? So I'm just saying, I'm just stating the facts, right? No, I'm not -- it's not a political thing. There's no discrimination on parties. It doesn't matter whose party he is now. That's my point, okay? So the government spends -- this is $4 trillion. We spent $3 trillion in March, right, because of COVID. So the numbers have gone off the scale. Well, this is a cool thing. If you -- you've heard people say this. If you took all the gold in the world, you could fit it into an Olympic swimming pool, okay? It's not true if you were stacking 400-ounce troy bars, right? If you're stacking 400-ounce for bars, you're -- the helicopters at the belly of the Statute of Liberty there, right? But if you melted at all, right, and just put it into 1 cube, it would fit into an Olympic swimming pool. That's a fact, right, that -- as per this graphic. The gold sphere that you see outside right there in front of that little pouch next to the house. You see where the green arrow is pointing? That's 1 metric ton worth over $50 million. So the real economy is coming to bear here. Gold is moving in 2020 despite all the good news that comes out on vaccines, despite all the good news that comes out on recovery, gold is just hanging in there right at $1,900. We've reached peak production. Everybody says, when do you reach peak gold? We reached it 2019. You're starting to see the reserves decline now. Meaning we're mining more than we're finding. Fact. And then people say, "Well, what's the gold price going to be?" So if you listen to some of the pundits, say, well, if you're going to cover money supply, it's $3,600. If you're going to cover a broader definition of the money supply, it's going to push $8,000. But I think there's a different paradigm here. Jim Sinclair and Bill Holter, who are 2 of the most respected individuals in the gold industries, calculated in the 70s that if it was up to -- if gold had to cover the U.S. debt, if gold had to cover the U.S. debt, dollar-for-dollar, and you assume that there's 8,000 tonnes in the federal's Fort Knox that gold would have had to get to $800 to cover the U.S. debt. And everybody thought they were done with. They were mocked. I don't remember what the gold price was at the time. Less than $100? In the early '80s, it hit $800. And then came back out later, a decade later and said, on the path that we're heading, gold's going to have to be $1,650 to cover the U.S. debt. And somewhere around 2011, '12, 13, we hit -- we ultimately hit that $1,900. But if you look at the average over that year, it's like $1,650. So now they've come out and in fact, what they said is, if we assume the Fed only has 4,000 tonnes, not 8,000, let's give them a haircut just to be conservative, what is the number that gold would now have to be? And so they asked Sinclair on point in the interview, and it goes -- I don't want to say it. He goes, they are like, why? He goes, because I was mocked the first 2 times, but this is an unbelievable number. And so they pressed him, and he didn't want to say it. And then finally, he came out and he said, "We predicted the $900. We predicted the $1,650, and we're now predicting $3,500 between 2023 and 2025." He said, "But that's not the question you're asking me. What is the number going to need to be to cover the U.S. debt? Somewhere between $50,000 and $87,000 an ounce, okay." So I'm -- am I predicting $50,000 an ounce? No. But there's no scenario, there's no scenario that I can imagine where we won't see $3,500 in the near term, and someone will see $10,000 plus, and I can't put a time frame on it. And it's just based on covering the debt. It's the simple economic that has played true every single time. So the reason I present this, this way, I went back and looked and there's a link here to the actual interviews if you want to see it. But I looked at what drives gold? And I traded -- we created this matrix and it used to be an inflationary period, gold's going to deflavor. It used to be all these scenarios where you have up on gold, down on gold, up on gold. Every single scenario leads to higher gold prices, which is not -- this is unprecedented. Like we're in a monetary situation, unprecedented, never happened before, no matter which one of these things you want to play out, lower discoveries of the mine, China's this, diversifying that. Every single one of them mathematically calculates to a higher gold price. It's just a question of when. So I wanted to present that to you to say, we're not a seller of gold, right? We don't believe that selling gold is a good return equation. There's always a price. There's always a concept. But net-net, we're holders and acquirers and developers and producers of gold. So I'll -- that's the closing and formal presentation on gold. I hope you find it a little bit interesting. We like to shape people's minds up because we don't think people understand at all what's going on. And it used to be that in the 60s, that 5% to 6% of most portfolios held gold. Now you see 99% of the portfolios having 0 and a few people like us having too much -- not too much. But now with Buffett's move with Ohio teachers' move, with Texas pensioners' move, you're starting to see a shift. If gold went to 5% to 6%, right, forget it. I mean, these prices are going to the moon. So questions?

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Yes. Yes. So on the pension, right. So there's 2 things to talk about on the pension. A couple -- yes. So a couple of years ago, as part of my presentation, which kind of rips your soul out, okay? You talk about government debt, right, which is 20 -- it was $23 trillion starting the year. It's probably going to end up closer to $30 trillion. Because of COVID and everything that's happening there. I know it's because of COVID. COVID sort of broke the dam open of what everybody was wanting to do anyway, which suspend their brains out, okay? $30 trillion of debt. The $30 trillion of debt is federal debt. The $30 trillion of federal debt is a joke because the federal obligations that are unfunded are over $130 trillion, right? So that's the first point. The point about the pensions, there's 2 points I'll make, is that you look across state-by-state-by-state, okay? And we're sitting on a house of cards. You have these massive pension obligations at the federal and the state level that are expanding, right? And there's just absolutely -- if you look at the hardcore numbers, the majority of them are bankrupt, right? There's just no way they can fund these future pension obligations, right? And that was before the concept of what COVID's wreaking havoc on in terms of state and local economies. So you're going to see another layer of crisis develop financially below the federal layer, which is one of the points that I made. What I just was saying earlier, though, is that for the first time and I would guess since the '60s, you're seeing institutional money, the smartest money, Ohio teachers, Texas farmer, these -- what are they? These like leaders, right, in the market, starting to allocate back to gold, right? So first, you saw the governments start to accumulate gold, now you're seeing some of the larger institutions starting to accumulate gold. What's unusual about it is the U.S. institutions basically abandoned it, right? If Warren Buffett, the oracle says, gold is a barbaric relic, then everyone wants -- nobody wants to look stupid and invest in gold, right, because he says it. Now he switched. Now Ohio teachers follows. Now everyone now. That's why you saw some of the surge in the gold price and people are starting to accumulate. So the tension will be less production, more -- less supply, more demand. Less supply, more demand. And to a frenzy, and as soon as you get a credit default, as soon as you have a confidence event, then it will spike. If you don't have a confidence event, it's going to just go like this. Well, we were sure the -- like Scott says, when it dips, you buy it, right, and just keep accumulating it. Did I answer the question? Any other questions? So with that, I will adjourn the unadjourned portion of the meeting. Thank you guys all for coming. We're -- we have some plans and some activities in Reno. Obviously, in the future, we hope to get back on Gold Hill. We hope to be touring the site. We hope to be touring the MCU units. COVID just made that impossible for us to do. So we're not necessarily sure what the timing of the next annual meeting will be. We're not necessarily committed to having it this late in the year. It just continues to be these circumstances that do it. So it could be anywhere from June to this time of the year. Maybe it will be, so earlier next year. And actually take a few minutes socially responsibly and with masks, to mingle and talk to anybody as sort of -- as we wind down and head out. But thank you all for coming today. I appreciate it very, very much. Good day.

Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.