Comstock Inc. (LODE) Earnings Call Transcript & Summary

Good afternoon. Thank you, everyone, for joining us today. I'm joined with Corrado de Gasperis, who is the CEO of Comstock Mining. Comstock is listed on the New York Stock Exchange with the ticker LODE. Comstock is an emerging leader in development and production of mineral and metals essential to meeting the rapidly increasing demand of clean energy technologies. Comstock was also the winner of the Adelaide Capital Battery Metals Charity Pitch Battle, which we held on March 25. The company went head-to-head against 15 other issuers, and it was chosen by investors as the #1 presentation. So congratulations on winning this webinar today. Before we begin, I'll just warn, as usual, the presentation may contain some forward-looking information. You can refer to the company's disclaimers on their presentation or website for that information. After the presentation, we will also be hosting a Q&A session. So if you do have any questions, you can enter them into the Q&A box below. So thanks for being here, Corrado. Looking forward to hearing your presentation.

Thanks, Tina. Absolutely pleasure to be here. I guess I'll share my screen. Is that good? Can you see?

Yes.

All right. So welcome, everybody. Thank you for your interest in Comstock Mining. Going through a pretty remarkable series of transformations, which has really kicked in here in 2021. And we'd like to give you an overview of the company, and we'd also like to give you a deeper dive in the 3 lines of businesses that we're currently involved and engaged in. So Tina mentioned the forward-looking statements. So as we think about the company and we think about the history of the company, we're currently 17 years old. I've been involved now for 11 years. And we've always had a environmentally responsible mantra. I think that we've typically taken it very, very far for a junior miner. One of the reasons for that is we have the honor, if you will, of having consolidated an entire national historic district, the Comstock lode first discovered silver and gold in 1859. Remarkably, they mined almost 200 million ounces of silver and over 8 million ounces of gold primarily substantially all over a 30-, 40-year period and just into the early 1900s. By 1880, many people thought that it was done using the old methods. And so we had a responsibility not only to develop the gold and silver resources that we own. And that ownership represents an almost 10 square mile of property position with 6 miles of contiguous gold and silver mineral strike and a fully permitted beneficiation platform, meaning we can crush, we can leach, we can process, we can refine all here on our site. And we did so for 5 years between 2012 and 2016. But we've evolved beyond that. And when we did that, and you'll see that here in just a moment. We were exceptionally focused on the fact that the old timers used mercury in their amalgamation process. There was some contamination that we had to be very, very considered of. And we built not only a permitted beneficiation platform with some remarkable protocols working with the Nevada Division of Environmental Protection, working with the U.S. EPA, primarily out of District 9 San Francisco, working with the policy group in Washington, both the EPA and the state department to create protocols for mercury remediation. Initially, we were doing that for our own purposes, just to ensure that all of our activities would be safe, what you're going to hear about in this presentation as we've now extrapolated that into a technology, into a patent filing and into a global potential business. In addition to that, my background, my personal background in industry started in the graphite line of business with a company called GrafTech that was the largest producer of cathodes and electrodes in the world. And what we're seeing right now is just a remarkable electrification tsunami market wave that is almost difficult to exaggerate. And so we took our first foray into -- our second foray, sorry, into metal remediation from mercury now going into the recycling of lithium-ion batteries. But I guess, it's important for me to say, we've always had district-wide stewardship. We've always thought about product stewardship. We always think about quality and process stewardship. We think about social and natural as much as we think about financial. And quite frankly, we don't see conflict there. We don't see conflict. In fact, most of the opportunities we're looking at are stunningly more financially robust, higher returning while being climate smart and clean at the same time. So although it feels like we're pivoting to this, we've always been this. What we're really pivoting to is expanding into complementary businesses that really go from just being a single district gold and silver company to really being a global closed loop systemically oriented resource development and metal resource development recycler, renewer, developer. Our team is very, very senior. Our geologists and our engineers and even our treasurer and financial team have decades of experience from some of the best companies and best universities. We've typically been a relatively small team. We've got geology covered, engineering covered, finance covered, metallurgy covered. We have our own labs on-site. But we've now expanded into having archeological competency, cultural asset competency, with Alexia joining the team. We put out a release on that because we just thought it was different that we had a full-time anthropological, archeological, super competency on board. But it talks about how serious we are about everything that we're doing. We're very lean. We're very efficient. But our team is actually growing, and it's going to be growing very rapidly. You're going to see more engineers, more metallurgists, et cetera, because the chemistries of everything we're dealing with are very, very important to the success via the outcome of the clean technologies. So let me just start with the newest business that we've introduced, which is LiNiCo and LiNiCo actually stands for lithium, nickel and cobalt. Ironically, we've secured a new technology from a company in Singapore called Green Li-ion. And Green Li-ion has created -- weaving a remarkable process, remarkable chemistry-based process that doesn't take spent lithium-ion batteries just to black mass and then just to pure lithium, nickel, cobalt, as the name would suggest. We actually leapfrog over the mineral development and go right into coprecipitation processes that get us to 99.9% pure cathode materials. So we will absolutely be a supplier into the battery manufacturing industry with 99.9% pure materials. We have secured a state-of-the-art facility to produce this. Interestingly, the facility was run by a different hydrometallurgical company, Aqua Metals, who was doing something very, very similar with lead recycling batteries. They pivoted their model to a licensing model, which we think is very nice, very intelligent. I think they're really a good company, but it made the facility available and we jumped right on it. So we have a facility that can produce -- it can take in 20,000 tons of spent lithium-ion batteries and produce about 10,000 tons of pure cathode spec materials to go into battery manufacturing. While we're planning all of our work that's going on, it's happening right within that facility. In an industry that's just hard to exaggerate its growth profile, we're not delusioned. We certainly believe there'll be innovations in battery technology. We certainly believe that there'll be enhancements that we'll try to deal with the scarcity of some of these materials. But we also believe that 97% of these things going into landfills is nonsustainable. When you look at the amount of cobalt, the amount of lithium, the amount of nickel and the amount of copper that would be required, it's just some of the guidances that we've gotten come to fruition. I mean literally, you'd need half of millennia to mine all the lithium, you'd need almost a millennia to mine the cobalt. The numbers are silly. Even 50 years of nickel mining. I mean those numbers are silly. So the industry is aware of it. Gigafactory 1 is right across the street from our facility. Gigafactory 2 in Austin is already back integrating into lithium carbonate and into pure cathode production. What are we doing? Lithium carbonate, pure cathode production, right? We're meeting that demand just like they all are. We have a diverse technology. We're going to start out with lithium, nickel, manganese, cobalt, oxide batteries, NMC, if you will. But ultimately, our technology can produce the full breadth of various cathode segments in the market. What's remarkable is that with just 10,000 tons of these materials, we're looking at an extremely profitable situation. We know the 10,000 tons of materials comes from 20 of these Green Li-ion systems, and we're not sure that the facility is restricted to 20 Green Li-ion systems. I mean we can have 25, we could have 30. We'll have to figure out how much more we can get. But we know we can have 20. And so these numbers represent exactly that business plan. I mentioned the facility is right across the street from Tesla. You can see it in this picture. We're right in the middle of the largest, fastest-growing industrial center. We believe in the world, but we're not so sure of certainly in the country. So when you see the companies that are pouring in, including Google, including Switch, including Tesla. Tesla just recently indicated that they're going to expand the facility from making lithium-ion batteries also including semi-trucks. So just massive growth going on. And we're seemingly right in the middle of it. Moving on to the second business, which is the mercury cleanup, we call it MCU, and we have an ownership in MCU. Comstock has 25% ownership in MCU, but we also have the right to have 50% direct ownership in every single project. In this way, I'd ask you to think of MCU as a liner -- as a big miner with projects all over the world. And so our first commercial project was just initiated, which is called MCU Philippines. And Comstock has 50% direct interest in MC Philippines. And of course, we get 25% of the other 50%. So our economics in MCU is about 62.5% of all of its business. We love that. And we really believe that the global mercury dilemma, if you will, is just tragic. The UN announced in 2017, 140 nation accord called Minamata Convention mandated for all of its participating countries that they target 2020 to cease using mercury in industrial and industrial mining activities with an absolute emphasis on artisanal and small-scale miners, where these artisanal and small-scale miners are absolutely destroying the ecosystems because they're evil. No, they're not evil because that's the only way they know how to make ends meet. And so all the efforts of these countries to try to stop the ASGM contribution of mercury into the environment has been futile because they just go right back to having to make ends meet and feeding their families. So enter MCU, which not only has the technology to clean up the ecosystem, the soils, the rivers, the waters, but also can then replace the solution with a clean processing center that will not require the ASGM miners to be breathing and using mercury in such a devastating consequence. So we're very keen about this business. It emanated, as I mentioned in my introduction, by the fact that the Comstock used mercury certainly between 1859 and as late as 1907, when leaching breakthroughs has occurred. Actually, they occurred here on the Comstock just as a side note. But that pretty much eradicated the use of mercury in the first world. Certainly, it's not legal to use mercury in the United States or Europe or otherwise. So we don't have the same artisanal, small-scale miner. What we have is monstrous legacy districts that still have mercury contamination from 100 years ago, 125 years ago, 150 years ago. And so we embarked with the Nevada Department of Environmental Protection in the U.S. EPA to identify the potential hotspots. There were 234 mills on the Comstock in its hay day. And we identified all the locations. Our archeological team is identifying the residual cultural assets. We're identifying where there is still residual mercury. And we've created all the protocols for sampling, analyzing, extracting, remediating and we did it to a huge effect a couple of years ago by restoring an entire highway that was built on old mine doves getting local state and federal reclamation excellence awards. What that did was it attracted the technology that is MCU to us. The MCU principles came to us and said, "We have a great technology. We have centrifuges. We have reactors. We have spirals that we believe can really capture all the mercury, clean the soils and separate the gold at the same time." And so that base -- and you have the platform and the protocols for us to test it quickly, prove it to the regulators and move on. And that's what we've done. So to the left, you see in orange, the sophisticated system that is on the Comstock. And then to the right, you see the sanding gravel unit also with centrifuge spirals that just arrived in February in the Philippines that is up and running full-time with very, very low grades of gold and relatively low rates of operation, say, 100, 125 tons per hour. One of these systems, which cost about $2 million of investment to deploy. And that means the system, the people, the working capital, the operation to be generating $1 million a month. And when I say $1 million a month, I say low grades, low gold price assumptions, low rates of operation. The Naboc River alone could have 5 or 6 of these units deployed with much higher grades of gold trapped in the mercury. So in this arena, we're solving not just 2 needs that the world has, but frankly, 2 crises. There's absolutely no way that the electrification of clean lithium-ion technologies will grow for what's been announced if we don't see renewing of all these materials. And in that regard, there's dozens of companies moving into the space. And we believe we're in a leading position, already haven't secured our facility and our technology and building the supply chain. In the mercury business, we don't see any competition. We don't know anybody that can remediate the mercury with mobile units that self-sustain themselves that can be deployed into the theater, if you will, safely, carefully and effectively. So we're very, very excited about how we're taking a leadership role in addressing these 2 critical markets. And we'd like to say, everyone likes to talk about ESG. It's heartwarming, quite frankly, to see these companies really starting to address being more responsible. Probably, we would say it's long overdue. We've been that way for our entire existence as indicated by all of the recognitions that we've been receiving since inception. We didn't decide to do this last year or 2 years ago. We've been doing it since the beginning. And so for us, it was just a very natural way to expand, evolve and grow our business. I know for some people, it seems like a pivot. But for us, it was a very natural evolution. Just like to end with the Comstock because it's what we love more than anything. We mentioned we control a 10 square mile position. We have a fully permitted production platform. We're working on updating our technical report for the southern part of the district, which if you could see my prompter, I'm circling on the Dayton and the Spring Valley. And our partner, Tonogold is working in a similar context in drilling out our properties to the north and intend to issue a technical report as well. So we're going to be updating our technical reports. We're going to be updating hours in S-K 1300 compliant way. And for those who aren't familiar with the S-K rules, that's now the United States elevating itself to the NI 43-101 standard. Finally, frankly, as a U.S. registrant, that will allow us to disclose our technical reports and our required filings. That means our S filings, our K filings, our Q filings will finally be allowed versus prohibited from using that information. So we're catching up to the Canadian standard, in my opinion. The Dayton is our biggest resource. Tono's Lucerne and all the high grades to the north of Lucerne. We've already identified about 0.5 million gold equivalent ounce resource with a very, very low cutoff. We've already put an economic shell around 80,000 ounces of the gold and 700,000 ounces of silver. But it's really just the very, very beginning. What's great about it is even with what we know we have, there's economics. There's great economics, quite frankly. We believe it's very, very valuable. But we've got a 2-mile mineralized strike that's been virtually unexplored, which is why we did all the geophysics that was indicated in this prior slide and why we're finalizing our drill programs now to start expanding those resources. The partnership that I mentioned to the north, which is showing up in these darker blue boxes, is really what Tonogold is working on. Tono has the Lucerne mine. They also have leases on all of our northern high-grade targets. We have a minimum 1.5% NSR across the whole spectrum. We have more insofar as it relates to some of the Comstock and Occidental Lode claims, which are the highest prospective ones. And we have an option to purchase an additional 3%. So we end up being a very, very big stakeholder with anywhere between 1.5% and 5.5% NSR. We don't have any additional capital requirements related to those royalties. In fact, we're being paid annually. We're being subsidized annually to maintain our facilities and our platform for the eventual use of those in mining by Tonogold. And it's a meaningful amount. It's about $2 million a year. That's being subsidized, which makes us a very, very lean company. And we're still -- actually, that number is now $5.5 million due on Lucerne property. So there's a lot of revenue potential from the NSR. There's a lot of revenue potential from the properties that we've leased. And in the meantime, we're being subsidized, while at the same time, we're developing the southern claims. Tono really has hit on something, in my opinion, because they're data centric. And the thesis is this involves. All the data in the north, which if the Comstock means that there's underground tunnels going to as deep as 3,000, in some cases, 3,500 feet, that would be the deepest. And what the old timers did was that it really had a cutoff of like 50 grams per ton. From their perspective, it wasn't worth chasing if it wasn't 50 grams per ton. Once they build their exploration drifts and chase it down into tunnels, then that investment was sunked, then it was 33 grams per ton. So we know for a fact that there's just a tremendous amount of gold reserves at something less than an ounce per ton, 3/4 ounce per ton, 0.5 ounce per ton, 1/3 of an ounce per ton. We know where it is. And what Tono is doing is proving the concept that there's such a significant amount there more that really the old timers not only couldn't get but didn't have any interest in getting. It's so data centric, it feels like a very low-risk proposition other than some of the holes are deeper. So we've laid out our entire growth strategy, which is starting at the top to establish and grow the value of our mineral properties. We do that through technical reports and developments that we're doing at the day. And we also do that by receiving and supporting the technical results that Tonogold publishes for the rest of our properties. We're commercializing, like there's no tomorrow. Our ESG-focused metal systems, that's the mercury and with ion. I've been not shy to say we're only getting started. We have very broad competency. We're interested in acquisition. We're interested in building global supply chains. We're interested in technology that enhances what we're doing, and it's out there. So we're very excited. We have about $12 million -- $11 million in cash in the bank. We have about $25 million in nonbinding assets that we're monetizing. About $5 million of that was done last year. So we have $20 million to go. So we're well funded. We only have about 42 million shares outstanding and we're ready to go. So that's really the prepared marks in a nutshell. We're fully engaged. We spent a lot of time repositioning the platform. And I got to tell you, it's a lot more fun having the platform and growing it than repositioning it. So Tina, that's it fairly in a nutshell.

Thanks. It was a great presentation. We -- looks like we already have a few audience questions. [Operator Instructions] Just in the interest of time, I know Tom has a question for you about Tonogold timing and assay results.

Tom, can you hear me?

If he's not on speaker...

Oh, I see the question.

Yes. So he was just wondering when they will release more assays.

Yes. So they're very, very -- they've been very active drilling to the north, right? And what feels slow is that some of the holes that they are drilling to the north, I mean we know one hole that was at least 2,000 feet. So you're talking about weeks and weeks of drilling. And then we couple that with the frenzy that's going on, the labs in Reno, a pretty long turnaround time. Having said that, right, they're getting results back in, as we speak, and they're launching an even more aggressive drilling program on the Occidental. And so those holes are like 300 feet, 400 feet. So we expect not only to hear some great results from the deeper drilling, but we're going to start to feel rapid results from this more shallow drilling. All of which we expect to see good grades. So yes, so it's -- they're probably the most frustrated with the speed of the deeper drilling than anyone. We can tell you for sure, they're on it. They just got 2 new permits approved. They're stepping out and more drillings coming. So we -- the short answer is we expect to see a quickening without committing them to date.

And how many meters do they have planned for this program?

So it's time to staggering because -- and if you -- excuse me, to the north, there's tens of thousands of feet. So I'll let the audience convert to metric for me. In the near-term program, Tina, with the Occidental, I mean, we're talking about 1,800 to 2,000 feet, but probably spanning 60 different holes in the course of about 90 days. So they're really working diligently. It's going to be an extensive amount of data. The beautiful part about it is that they get to complement that data with what they already know, right? So there should be the ability for them, at least in the Occidental case to start connecting the dots of the resource probably faster than people would think. That's my opinion, Tina. That's what I understand. So it's great.

Yes. Okay. Feels good. And then second half of the question is the Tahoe commercial facility. Is that built out now?

So the Tahoe facility is 100% built out. But to be more specific, what we're doing right now is cleaning out all of the Aqua Metals equipment that's not applicable to what we're doing. All the air quality control is applicable, all the water treatment equipment is applicable. But they have some stuff that was very specific to their process that we'll be replacing with the Green Li-ion process. And really, we would expect that by August, most of that stuff will be cleaned out. And then by November, one small part of the facility that had some damage will be repaired, and then we will have it to be fully functional and then start receiving our equipment and selling our equipment and being off and running. We've guided to production in the first quarter of next year. Having said that, we are super active in building out the supply chain. We're super active in securing the feedstocks in the battery metal materials. We literally think of a battery as ore reserve. That's how we think of it. And so we're moving fast and furious to secure long-lived feedstock, if you want to think of it that way, long-lived mine plans for the recycling of battery metals.

And just to step back for a second. Can you talk about the terms of the agreement that you have with Green Li-ion and LiNiCo, just -- so we have a better sense of how that works?

Yes. Sorry, I grossed over that. Thank you for asking. So we own today 45.5% of Green Li-ion, but we have certainty to 64%, okay? And that should occur this year. It will occur this year. We don't see any reason why it would not occur this year. In addition to that, and the only other 2 investors in LiNiCo is the founder, Michael Vogel, who's Founder and CEO; and Aqua Metals, who also invested alongside of us. They have about 10%. So it's kind of an alliance of like-minded companies. LiNiCo then owns 20% of Green Li-ion. So in LiNiCo securing the Green Li-ion technology through the United States, they agreed to make a direct investment in Green Li-ion and Michael sits on the board of Green Li-ion. So it's a very, very tightly integrated group of 4 companies, all co-invested and cross-invested. But Comstock sits sort of at the top with ultimately 64% of LiNiCo.

Okay. Great. And just in terms of securing supply for the ramp-up, do you have a sense of time line for that or anything?

Yes. So the key to that -- so first of all, just with the LiNiCo facility itself, we are filing 2 primary permits, one is RCRA brazed, which the Aqua Metals facility was previously permitted in the same exact context for the same exact thing that battery metal is recycling. But that takes about 7 months. And then there's an air quality permit, which we're actually just applying theirs to us because it's the same equipment that will take quicker. But we're already active talking to suppliers. And it's almost certain that the battery metal supplies will be stored, right, in alternative locations than the processing facility. That's both by need and by regulation, right? If you wanted to store batteries at the actual processing facility, you would need a full RCRA permit, not a written determination in which you think of as permitting light. The only thing you can't do with the written determination is store, right? So it's going to be a spoken hub -- hub-and-spoke model where we're accumulating the batteries in certain strategic locations and then feeding the facilities. And in this case, our first one is 20,000 tons per annum.

And do you see any risk to the time line at all? Or what do you think the biggest risks are?

So we will have a continuous update throughout the rest of this year relating to building the feedstock, relating to the supply, relating to the storage and growing our reserves. So if you want to analogize that to a junior miner, we're building our reserves or our resources, okay? The -- there's 2 major deliveries of processing equipment. The first one is the crushing to black mass equipment. And the second one is to the Green Li-ion deploying their first and then ultimately 20 modules for getting to the top of the materials. There's inherently some risk in that. The actual dates that we're expecting is fourth quarter or later in the fourth quarter. So we've guided to the beginning of the first quarter to provide a little bit of buffer. So -- but I think it's important that he or she who controls the resource has a certain future. So we're spending all of our time while those systems are being built in securing the rest of the supply chain, which to me is prerequisite and more valuable than anything.

Are you exploring strategic partnerships with some of the battery producers in the area? I know you mentioned Tesla was really close by. So is that something that you guys are discussing?

100% part of the plan is partnering into the market. Honestly, right now, we're looking backwards and partnering with supply. So once we get the supplies secured, we will turn to the front of the system and start making offers into the market. But yes, both are critical part of the plan.

Okay. And then turning over to the MCU side a little bit. We've talked about the risks on the execution for the battery metals. Can you tell us about some of the risks on that side?

Yes. So on the mercury side, you mean?

Yes.

Yes. So in the mercury context, I think the biggest risk we would think of, we're still enhancing the system. It works, right? It's working right now in the Philippines, but there should be a clarification of that, right? The -- and as most of the people on this call would know, there are some mines and there's some resource materials that anybody could process and make money on, right? They may be very valuable. They may have a wonderful year. And of course, high grades solves most problems. In our case, that's a true statement also. In the Philippines, we're starting in less contaminated area where there's a significant amount of sand and gravel that needs to be processed and a significant amount of water that needs to be processed. And we're effectively doing that now. Having said that, we're enhancing -- we're looking at enhancements across the spectrum because we want to really be able to use our system in the most difficult scenarios. And so I would say that it's not a risk to entry. We're entered. It's not a risk to growth, but it could be a risk to how we optimize the projects that we take on. So that would be number one. Number two is, obviously -- and there's 2 -- if you were going to segment the market into 2 big buckets, there's U.S. historical districts and then there's the international ASM -- ASGM opportunities. In the Philippines, I feel blast, right? Our joint venture partner in Philippines is a company with many businesses, many interests and mining is a critical one. So their ability jurisdictionally to secure the permits, oversee operations, work with us in deployment. If I could -- if we -- if our first 12 deployments could replicate and clone our partner there, we would do that. But obviously, some of the jurisdictions we won't have as easy an entry. There will be jurisdictional risk, et cetera. So the good news is because we don't really feel out of competition, we could select which jurisdictions we want to go to first. And that's why we picked the Philippines first because we believe it's maximum chance for success. Secondly, there are thousands of abandoned mine sites in Nevada alone, even more thousands in California, Idaho. The EPA is talking to us about a big one in Montana, right? So we don't have to go outside the U.S. It's just that the UN mandate is so keen on stopping the destructive ASM activities, we feel it's critical that we do that, too. So hopefully, that sheds some color on how we look at the risks. There's a little bit of technology risk, but it's really more for optimizing what we can do; not if we can do it or not at all. And then secondly, jurisdictional risks, and we'll mitigate that by managing its projects we select and who our partners are.

Well, it's interesting. We hosted an Idaho conference last week, and a lot of the discussion was kind of around the modernization of mining techniques. So I think that's obviously at the forefront of a lot of government's mines. So I can see that this would have a very valuable application.

It's also warm and foggy, and I don't mean that kidding when the President of the country, the governor of the district, like embrace you with open arms, and they are, "When are you going to get here? How quickly can you get here? When can we start versus the normal friction that you get from the committee." It's really -- it's 90 day. We really feel great about it. So...

Yes, that's fantastic. And can you tell us about the operating cost element associated with the units and the gross margin potential?

Yes. So the variables are very, very similar to a feasibility assessment in our mine. So we absolutely look at the grade. It's a little bit harder to do, right, because you have disturbed materials. So it's not as geologically found in some of the accepted practices for estimating resources. But we look at the grade, we look at the nature of the metallurgy. Ideally, for us, it's old amalgam that hasn't been reprocessed or retreated. That works best in our system. We can separate the mercury and get the gold very effectively. And we don't really have the notion of strip ratios, I mean, it flies in some regard, but very, very little. Usually, we're looking at piles of c***, like piles of old mine tailings, et cetera, et cetera, or maybe you think it has alluvial, right? As alluvial, which is the easiest, right? So what's the -- so we're not -- we haven't guided to the specific variable costs, but we have said, deploying an entire unit which includes all the equipment, which is mainly the mercury remediation system in the middle, the loaders, the excavators, everything you would expect to see in a mine surrounding the equipment. And the people total all-in is $2 million. And that with $1,450 gold price assumption and a 1 gram -- slightly over 1 gram per ton grade assumption, we could generate $1 million a month just from that one system, right? In the Philippines, we might have 5 or 6 of those systems deployed within the next 2 years. If the grades are higher than 1 gram, 2 grams 3 guests, 4 grams, 5 grams, 6 grams, 7 grams, and I said all those because that's what we're seeing, it could be really remarkable. So we're trying to be conservative until we have at least 2 or 3 months of operations, and then we'll be more specific with our guidance.

Okay. And one of the audience members was wondering if there's a claim on the percentage of proceeds and where the gold would be sold to.

So broadly speaking, it depends on the project. Our preferred mechanism is to select projects where we have the rights over the claims. And so like a mine, we will benefit with all the upside. So in the Comstock, which is where our first unit is sort of perpetually deployed for development, that's true, okay? For most intents and purposes, that's true. For the Philippines, our partner has all the claims, also true, okay? Could someone come to us and say, "We want a royalty to let you reprocess our materials." They could. Could someone say, "Hey, we just want to pay you $10 million to clean up our ecosystem." They could. But we haven't -- so far, it's been more -- we're thinking more like we're the miner who's cleaning up the soils in the environment. And that's a very easy sell, right? Because we then deploy the $2 million into the system. They don't have to pay any money. We do all the work, but then we keep the benefit. In the Philippines, we had a very important prerequisite because the largest single cost item is mercury disposal. We have to make sure it's disposed of safely and not being put back into the black market and used again and the government agreed to handle all the mercury storage. So that took like literally thing as largest cost item out of our P&L.

Can you tell us a little bit about some of the early results in the Philippines?

Yes. So we just literally got started last month. We're up and running. The system does about 125 tons per hour. There was pomp and circumstance like we had to sit up at the very bottom of the river and President and the governor and 100 delegates came. We have about 10 of their regulators. Their EPA is called DENR, the Department of Environment and Natural Resources. And they're testing all of our material as it's coming off. They wanted us to start slow. But now just last week, we've moved up river to higher contaminated area, and we're ramping up to that full area. But we don't yet have -- we're going to have revenue very soon. One of the reasons is, obviously, we get gold out of the process. But in the Philippines, we -- also there's a huge demand for sand and gravel for the construction industry. So we signed up, I think, like 3 contractors who are already willing and able to take clean materials. And the regulators are right there and making sure it's clean. We're going to start having revenue very, very soon. And then a couple of months under our belt, we can provide more -- I would say, more substantive financial guidance.

Okay. Great. And you mentioned how much cash you have already. But can you tell us about your burden rate? And how much cash -- or how long you're expecting your cash position loss?

Yes. Yes. So we -- good question. So we paid off all of our debt. We did the recent capital raising where we raised net $15 million of proceeds. We paid off about $3.5 million of debt immediately. So we have no debt. We have no debt obligations whatsoever. That puts our operating expense profile when I say operating expenses, I mean all expenses, all expenses at about a $4 million cash number per annum, but we're getting subsidized $2 million from Tonogold, right? So the new paradigm, I mean, we were probably closer to $5 million spent last year, and Tono reimbursed us about at $2.4 million as an example, last year. But with the debt going on and some streamlining work, we're closer to $4 million. So that's our net burden. It's relatively low for all the things that we're doing for sure. But as we bring when it go up and as we bring solution to our businesses, then we'll start to grow our resources. But we should also be then having revenue and cash flow. So I don't think there's any issue in terms of our capital resources. We're solid. And plus we're raising about -- correct the word, we're getting about $20 million in proceeds from selling nonmining assets, right? So that will add to the treasury.

Right. So I was just going to ask about that, actually. So you do have some noncore assets that are up for sale, so to speak? Are you expecting to realize any of those sales within this year? Or do you have a sense of timing for that?

Yes. We expect -- so we have 3 properties, 2 are in Silver Springs. One is industrial, one is commercial with proceeds of over $10 million. We expect that within the next 2 or 3 months, some of our investors will be like, "Oh, yes, that's the cry has been saying for a long time." But last year with COVID, there were some delays in monetizing those properties. But we have secured agreements with deposits, right? So we just need to get those closed out. We know the fund that's buying those properties. We have close association, too. We know all the activities. And they're -- really their next capital that comes in goes to closing those properties finally. They've already closed on a lot of properties. They're just finally getting to the point where ours will be the next one. The other is we have a 225-acre ranch that we've leased with the option to purchase. We're highly certain that the lessee will buy it, but they're not required to do that until later in 2022. So we would expect to get $10 million plus in proceeds this year. We would expect to get about another -- I'm going to say, $8 million in monetizing the Tono securities, including a no payable that they have to us of about $5.5 million, maybe higher than $8 million, maybe $9 million. So that pushes you close to $20 million right there. And then another $2.5 million, $2.7 million comes in 2022 from the rep sale.

Not bad.

It's very good. It's fine for getting there.

So we talked about divestitures a little bit. Any other complementary businesses that you would consider adding?

Yes. So we're very interested in this whole renewable space. We want to stay within our core competency. But as we continue to grow LiNiCo, some of our engineers have broader competency. We love carbon. We love graphite. So we're looking at some carbon. We're looking at some graphite. We're looking at some water purification technologies as well, which helps every one of our businesses, all of them. So those are the things that are sort of right in front of us. There are some other carbon-based activities that we're also looking at that are part of the screen shift that's happening. We're very -- having gone through the pains of being a junior mine into production, we're very ridiculously focused on the economic feasibility. So there is a lot of science out there that works just like there's a lot of gold that's in the ground. But can we get it economically feasible? That's what we focus our time on. And it's shocking. Like there's just some incredible business models right now. And they're looking to get -- to really get commercialized in a much bigger way. So those are the kinds of things we're looking at.

And from the audience, is there a dividend in the company's future?

So it's not a crazy question. And it feels crazy because of where we were in the last 3 or 4 years. But it's not a crazy question. We'll look to deploy this capital into LiNiCo, into MCU, if it's required. MCU, the greatest thing about alluvial mining is -- whereas hard rock mining, be it open pit or underground, takes years and years to define the resource, takes years and years to permit the resource, takes years and years to build out the facilities. And then maybe within a decade or now they're saying 15 years, you see -- you pour your first ounce. We deployed the MCU unit in February. We've already had our first ounce, right? I mean it comes fast, right? So we may not need a lot of capital front, although there are some technologies that can really enhance it that we're looking at. So the first point is we will reinvest into revenue growth and cash flow growth. I think when there's a time that we have strong cash flow, then that's probably the time we'll start talking about dividends.

Okay. Great. There's a question from the audience as well about the status of your real estate holdings.

So our 10-square mile property is contiguous. It's mineral claims that had thousands of acres, except for the Lucerne mine, which we sold to Tonogold. And they still have no payable to us, as I said, about $5.5 million. We want to control everything in that. The only other nonmining properties that are -- we're talking about is commercial, one is Silver Springs -- industrial Silver Springs, the ranch in Dayton. We used to talk about selling the Gold Hill Hotel, right, which is the oldest continuously operating hotel in Nevada and on the border of Virginia City. It's cash positive. It's delightful. It's our favorite place. And so we're not going to sell it. That's the one not mining asset. If people are thinking in that context, that we're not interested in selling really.

There was a question that just came in. How is the SSOF coming along?

So SSOF is the Sierra Springs Opportunity Fund. SSOF was formed in 2019 as a qualified opportunity fund and immediately in that year, raised about $11 million from incredible investors, acquired manufacturing facility, acquired an operating airport and then got rights to consolidate all the rest of Silver Springs proper, including the 2 properties that we keep talking about that we're selling to the fund. The fund -- we invested in the fund, we seeded it to get it up and running. And we have about 6.7 million shares that we've got at $0.05 a share. We did the first offering in 2019 at $0.5 a share, right, moving our investment from $335,000 to $3.35 million. And now we've been actively raising money. Money is coming in like almost a weekly basis at $1.8 a share, right? So our investment is $11 million, $12 million in SSOF right now and SSOF plans to register publicly and be traded. So we're very excited about its progress. It's been slow because of COVID. But with the massive amount of industry and business that's flooding into Northern Nevada, we can't -- it's almost -- it's hard to keep up with it. So there's a quickening happening. First thing will be -- we sell -- we close on these next 2 properties. SSOF will then own all of those properties. We will get our money and then it'll just -- from what I can see, it'll just keep growing in value. I mean there's just a -- Nevada has become -- Northern Nevada has become one of the top 3 destinations for all of these Silicon Valley businesses that are commercializing. We're literally the leader in battery metal recycling, but that's just a drop in the bucket. So the Gigafactories tell you where people want to be. Gigafactory 1 is here. Gigafactory 2 is in Austin, Texas, right? And right now, people are coming here or going there to establish new manufacturing. There's a lot of land. There's a lot of infrastructure. And it's a very strong contrast to California, which is highly regulated, high taxes, less business friendly. Nevada is less regulation, way more inexpensive, almost no business taxes and super pro-business. So it's a -- that SSOF is going to benefit that as far as we can see.

That's great. Obviously, a lot to unpack with the business. We've got a lot of complementary businesses in the sense that there's clean tech focus, ESG as well. But is there a point in the development stage where you would consider potentially spinning out the MCU business or the battery recycling to unlock more value? Or what are your general thoughts on that?

Yes. I think that philosophically, we wouldn't have that as a priority. We want to grow revenue, grow cash flow. If there's ever a scenario where the market isn't recognizing the value, let me just talk about value for 1 second. We invested in Green Li-ion, right? We own 20% LiNiCo, owns 20% of Green Li-ion at a $10 million valuation. Comstock invested in LiNiCo, 64% at a $17 million valuation. Any company that's out there, Li-Cycle, American Battery Metals, Redwoods Private. But any of these companies, their valuations are staggered, right? So maybe not staggering, but very high, right? So we feel like we got in at great value. We want to grow cash flow, grow cash flow, grow cash flow. But if ultimately, we're not being valued within the range of the comps, then we would consider unlocking that value, whatever way made sense. But let me answer one of the questions that you were talking about in a very tactful way. Like we're not involved in any SIM businesses, okay? So even if we got involved in carbon through hemp, I'm just making something up now, right? Like we would not be involved in THC. Like we would not be involved in cannabis that have THC. We would not be involved. And I'm just going to say SIM businesses because Nevada is known for SIM businesses. We're not involved in any of those types of thing. But I know people are trying to be funding, but it is money. But I just want to say that. So that's the only things that we are...

Well, good to know and reassuring.

For sure.

We did get another question from the audience. Within the battery recycling industry, you mentioned you're establishing the back end of the business. What do you expect speculate the time line would be to make the pivot to the front end of the industry?

So I think like hardcore, the next 6 months is building this back. It's hard core, like, right? It won't stop, by the way, but like I can just see a dedication from March to September. And then, let's say, what's wonderful is that Green Li-ion sort of proved their tech in Singapore, they can produce pure samples, right? So come September -- and it could happen sooner, it depends on resource contention and those kind of things. But we can start approaching the market, getting our samples spec into their products well in advance of us having the system up and running and being able to mass produce. So we'll think about those lead times, and we'll make sure that we're doing it with the appropriate lead time. So that when our systems running, we have customers and we're selling to them. We're getting a lot of calls, quite honestly, and we don't reject the calls. We -- so sometimes if our plan is good, but we can't help as the market wants to know sooner and then -- so we're in fairness, we're already engaged with some of that. We're trying -- it's not our priority. It's customer and markets' priority. So we'll respond to that accordingly.

Okay. Great. And we're coming up onto the hour mark. So why don't we conclude with a summary of some of the catalysts that we can expect for the rest of the year?

Yes, absolutely. So a big catalyst is us announcing partnerships and strategic agreements for supply of feedstock. A big catalyst is getting the written determination in those permits first filed and then approved. It's not simple. The written determinations are not easy. Where you're located? Proximity to residences, process is all very critical. We're in a certain environment where we will get it. And then as you said, announcing customer relationships, I think you'll see all that, like sort of in the next 9 months. With the mercury business, the huge one is very soon coming and we're going to announce revenue. And soon thereafter, hopefully, we're announcing the profit. And then we'll be deploying the second system into the Philippines. So that will occur this year. And then with the mineral properties, we're looking to publish our technical report by the middle of this year. And Tono is going to publish their technical report, hopefully, by the middle of this year. And so that will give huge transparency to the geology and the resources that are in the ground. So I would say 2021 is going to be pretty robust. We also sort of slipped out with our shareholder letter that we're involved with another transaction that we think should close this quarter. So that will be very exciting. And I would like to -- before you ring the bell on me, even though it wasn't treated. I acknowledge that the whole pitch battle was for charity and for the cancer donations and all 62 people that are still on the line, please consider donating even something. It's just an amazing cause and it's wonderful the way you guys set that up.

Yes. Well, thank you so much for participating. Just as a quick update, we've managed to raise over $50,000 so far. And there's a good amount of funds generated from that event. So obviously, appreciate your participation and congratulations again on winning the pitch battle. Great story.

Very fine. Thank you so much for having us.

Thank you. Have a good one.