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CEO Blog - August 30, 2011
Tuesday, August 30 2011 16:08
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Question: You disclosed that you have received your newly required Mercury Permit on July 27, but that you were waiting for it to clear appeal.  Has this occurred?

Answer: Yes, we announced that we had received the Mercury Permit from the State of Nevada Division of Environmental Protection (NDEP) on July 27, 2011.  On August 22, 2011, we received notification by the State Environmental Commission of Nevada that the appeal had been withdrawn and, accordingly, we have successfully cleared the final appeal process period without incident.  The issuance of our Mercury Permit represents another important step in our progress toward gold and silver production.”

This permit is regulated under the Nevada Mercury Control Program and is intended to ensure the safe and proper collection of mercury at a precious metal processing facility. Mercury is a naturally occurring metal found in very low concentrations in the mineralized rocks of the Comstock Lode. When gold and silver ore is processed, a portion of the mercury that is also present is simultaneously extracted from the ore. The permit demonstrates NDEP’s assessment that the proper equipment and procedures are in place to safely separate this mercury (through use of a Mercury Retort). The natural concentration of mercury is very low on the Comstock, and the Company anticipates very small quantities will be collected.

Just as a reminder, we have previously communicated that Comstock Mining does not use mercury at any time in the processing of gold and silver. The mineral process equipment involved is routine and required for all Merrill-Crowe type processing facilities operating worldwide. The mercury vapors are collected in the furnace retort, which is a closed system with engineering controls and monitoring equipment.  The mercury vapor is then condensed into the liquid state. All the equipment is located in the processing facility at the Company’s American Flat location.

In contrast, historic mining on the Comstock did use mercury to process ore. Prior to 1906, mercury was used in the amalgamating process to attach to and separate the gold and silver from the ore. The miners at that time did not know the dangers of doing this and used about one pound of mercury per ton of ore. At the turn of the 20th century the U.S. Bureau of Mines, in conjunction with the newly established MacKay School of Mines at University of Nevada, developed a cyanide vat leach process to replace the mercury process in mining. Interestingly, the first mill to use this system in Nevada was the Donovan Mill located in Silver City, and the technology was almost immediately implemented on the Comstock because of its superior efficiencies.

This historic use of mercury on the Comstock is well documented from the original Carson River Superfund Site Investigation in the 1990s. NDEP, supported by the U.S. EPA, continues monitoring these sites and is currently preparing an updated archaeological study to increase its understanding of the historic mill sites in the area. The Company does not see any conflict between NDEP’s efforts and its exploration and mining plans. In fact, the Company is working with NDEP officials to establish protocols for safe and intentional mitigation of some of the historic mercury sites where this can be done in conjunction with normal mining and drilling operations.  We are committed to sampling relevant areas of disturbance with the intention of eliminating or mitigating any concerns over pre-existing mercury sites.

Our cooperation with NDEP represents an unprecedented effort for effectively defining the existence of any residual mercury in the Comstock in conjunction with our planned drilling and mining activities. This is a real opportunity to discover more knowledge about the precise location of past mills and residual mercury levels, providing real benefit to the entire Comstock community.

Kindest regards,

Corrado De Gasperis
President and CEO