Portfolio Manager Discusses Comstock Mining

April 5, 2011

Jared Sturdivant, portfolio manager and managing partner of O-Cap Management, LP, likes to find special-situation investment opportunities.  Below is an excerpt of an interview with Jared in which he discusses Comstock Mining (OTCBB: LODE).

The Gold Report: For the rest of our conversation, I’d like to talk about public companies because those could be of value to our readers. Do you have examples of companies that meet your criteria that you’ve taken a chance on?

Jared Sturdivant: Sure. We look for two underlying components in an investment: Value and a catalyst. Typically, the catalyst is a restructuring of some sort. One company on the gold-/silver-mining side is Comstock Mining Inc. (LODE). What was interesting about Comstock (formerly known as GoldSpring) is that it had assembled a large area of land around the historic Comstock Lode Mining District in Nevada. Since the 1800s, that district has produced 8 million ounces (Moz.) of gold and 190 Moz. silver. Comstock put this big property together through debt financing. However, it was a penny stock and it was headed for bankruptcy.

Then, an investor by the name of John Winfield bought up a lot of the debt, consolidated and converted it into a preferred structure. He could’ve filed bankruptcy for Comstock but restructured the company and kept it public instead. He effectively transitioned that debt to a preferred stock, which prevented a Chapter 11 process. Shortly thereafter, the company did a major refinancing. It financed US$35M of new convertible preferred stock to outside investors. This, along with hiring new CEO Corrado De Gasperis, was a major game-changer. It saved the company from bankruptcy.

Corrado laid out three aggressive targets, which we thought were very attractive. The first was to increase the gold-equivalent ounces (Au Eq.) from 1 Moz. to +3 Moz. The second was to enter production in the second half of 2011. And, the third was to get 2012 production up to 24 Moz. Au Eq.

What we really like about the situation is that you’re buying an exploration company that is converting to a producing company that’s growing resources substantially. We think it will have cash costs of $450–$500/oz., so Comstock could do US$20M in cash flow next year very easily. And, the company’s got two projects. The Dayton Phase 1 drilling program is now hitting bonanza-type grades, so there’s a lot of resource upside as the property continues to get drilled.

We looked at this and said, “Wow this is interesting.” Not only do you have a company going from an explorer to a producer, but also you have a new management team with great plans for a resource upgrade. Comstock also has an AMEX listing coming in May, which is another tangible catalyst.

When you look at the valuation, if Comstock gets valued like a producer, you’ve got multiple upsides from here. If the company continues to grow the resource base, once it starts producing 3, 4 or 5 Moz., Comstock really starts showing up on the radar of acquirers. We think that’s attractive.

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Comstock Mining Announces 2010 Results

March 31, 2011

Comstock Mining (OTCBB: LODE) releases certain unaudited financial results for the year ended December 31, 2010, as part of which, the Company is hosting a conference call at 2:00pm EST / 11:00am PST.

Today’s call will be based in large part on the Company’s press release from today, which discusses in detail (i) the Company’s 2010 full year results; (ii) exploration and development activities; (iii) production expectations; and (iv) a general corporate update.

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Comstock Mining to Host Call – Discuss Operations and 2010 Results

March 25, 2011

Comstock Mining (OTCBB: LODE) will host a conference call on March 31, 2011 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time to report fourth quarter and year ended 2010 results.

The call will include a moderated Q&A after the CEO delivery.  The dial-in telephone numbers for the call are as follows:

North America:  (877) 640-5745; PIN 8375460

Other:  (416) 850-2060; PIN 8375460

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Comstock Mining: Travel Dispatch from the “Lode”

March 8, 2011

We had the opportunity to visit one of North America’s most iconic and fabled mining districts last week – The Comstock Lode (located just south of Reno, NV) – which is being brought back to life by new client company Comstock Mining Inc. (OTCBB: LODE). 

At one time there were well over 100 public companies working within this precious metal infused corridor just south of Virginia City, NV – a mining boom town that to this day retains much of its historical character (yes, this is the Virginia City from the western TV series Bonanza).  

To say that the tour of this hallowed mining venue was impressive would certainly be an understatement. Comstock Mining has aggregated a large land position that incorporates nearly all the past producing and prospective ground in the district, and with multiple drills turning and preparations underway to bring this once prolific zone (over 8 million oz’s of gold and nearly 200 million oz’s of silver historical production) back into production in the near term – coupled with an aggressive exploration plan to materially expand an already significant gold resource (~1.6 m oz current gold resource) – this is a mining program that is very much on the go and one we expect to be talking about a lot over the next few months – they reported their richest drill intercept to date yesterday with 3 meters assaying at over 1.12 oz gold per tonne.

We have included the following Travel Digest penned by Torrey Hills Partner Andy Hoffman below for anyone that would like to take a quick tour of the Comstock  – without getting your boots muddy!

Comstock Mining – Dayton Drilling Finds Highest Grade Mineralization To Date

March 7, 2011

BabyBulls.com’s newest client – Comstock Mining Inc. (OTCBB:LODE) hit the ground running this morning with a significant exploration update – reporting their highest grade mineralization to date at the Company’s Dayton target (within Nevada’s iconic Comstock Lode district) – with assays running as high as 1.121 oz/tonne gold and 2.279 oz/tonne silver over a 3.05 meter interval (within an interval of 41 meters grading 7.47 grams/tonne gold and 23.46 grams/tonne silver).

More information is available about Comstock Mining on their website at: www.comstockmining.com and byvisiting Comstock Mining’s profile page on BabyBulls.com at http://babybulls.com/comstock_mining.html 

We have included today’s press release below and recommend that everyone get up to speed quickly on Comstock Mining – an historic name in the industry that we expect to hear plenty of news from over the next six to twelve months as they embark on an aggressive exploration campaign to add gold/silver ounces to their already considerable resource levels and move quickly to re-establish precious metal production at one of North America’s most storied and prolific mining districts.

3/7/2011 9:00 AM – PR Newswire

Results Include One Ounce-Plus Intercept in Hole D11-21

VIRGINIA CITY, Nev., March 7, 2011 /PRNewswire via COMTEX News Network/ —

Comstock Mining Inc. (“Comstock Mining” or “the Company”) (OTC Bulletin Board: LODE) announced the results for thirteen additional reverse circulation (RC) holes from the first phase of drilling at its Dayton Resource Area (the “Dayton”). The results include the highest-grade interval encountered to-date at the Dayton: 10 feet (3.05 m) grading 1.121 ounces per ton (38.39 g/tonne) gold and 2.279 ounces per ton (78.05 g/tonne) silver, contained in an interval of 135 feet (41.15 m) grading 0.218 ounces per ton (7.47 g/tonne) gold and 0.685 ounces per ton (23.46 g/tonne) silver. Many of the holes also encountered the deeper, silver-only mineralization that was first encountered in D10-01, the first hole in phase one.

(Photo: http://photos.prnewswire.com/prnh/20110307/LA60013)

As previously announced, this phase of Dayton drilling was designed as a series of three east-west “drill fences”, or rows of drill holes, spaced approximately 750 feet apart. All of the holes on the southern fence and the first holes on the central fence were announced in the Company’s February 28, 2011 press release. The holes announced today include more holes on the central fence, all of the holes on the northern fence, and an additional three holes on an intermediate fence between the central and northern fences.

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