CEO Blog - Oct 21, 2010
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Comstock Mining Raises $35.75 million in New Equity

Comstock Exchanges All Senior Debt for Equity, Secures Land

 

We announced today the successful completion of the three remaining objectives of our previously announced restructuring and recapitalization plan. The completed objectives of the plan include raising $35.75 million of new equity from an outstanding group of institutional other accredited investors, exchanging all of our previously defaulted, senior secured debt and related obligations for equity and securing integral land mineral rights.

The new capital, successful debt restructuring and land consolidation represent a watershed event for the Company and it builds on the success of our recent NI 43-101 technical report, that validated total measured, indicated, inferred, and historic resources of over 1.6 million gold equivalent ounces and mapped a path for near-term production.

We couldn’t be more pleased with the tremendous quality and breadth of our expanded investor base. The strength of this capital raise coupled with the continued support of our existing stakeholders has positioned us with a strong and stable balance sheet for accelerated growth.  We appreciate the patience of our stakeholders and the persistence of our management team.

Moelis & Company acted as exclusive financial advisor to the Company.  Moelis & Company also acted as lead placement agent and Global Hunter Securities, Rodman & Renshaw, LLC, Merriman Capital Inc., Legend Merchant Group Inc., and Anderson & Strudwick, Inc., acted as placement agents in connection with the private placement.

The recapitalization was a critical prerequisite of strategic plan. The goal of that plan includes enhancing stockholder value by commencing commercial mining and processing operations in 2011, and validating qualified resources of at least 3,250,000 gold equivalent ounces by 2013.

The following are key highlights from the transactions:

  • Exchanged all $29.4 million of its defaulted senior secured convertible notes and related obligations for shares of a newly created Series A-1 Convertible Preferred Stock and Series A-2 Convertible Preferred Stock (collectively, the “Series A Preferred Stock”). This transaction also clears all defaults under the terms of the notes being converted.

  • Raised $35.75 million in gross proceeds ($32.75 million, net of commissions and transaction related expenses) by issuing shares of a newly created Series B Preferred Convertible Stock (“Series B Preferred Stock”) to fund the Company’s business plan to accelerate mine development and production and enhance exploration.

  • Acquired exclusive rights of production and exploration with respect to extensive mining property, integral to the Company’s nearly 6,000-acre land position, through an operating venture agreement, named Northern Comstock LLC.

 

Securing these exploration target-rich land and mineral rights in a long-term and safely capitalized manner, completes the consolidation of the Comstock Lode District and enables tremendous exploration potential.  These properties include the historically bonanza-rich Gould and Curry, Woodville, Savage, Hale-Norcross, Yellow Jacket, Justice and Keystone properties, among many, many others. Our fall drilling program is on target for commencement on Monday, October 25, and we look forward to the results of our ongoing metallurgical testing by February, both representing key prerequisites for commencing production in 2011.

The Company has also agreed to file a registration statement with the Securities and Exchange Commission covering the resale of the shares of common stock underlying the Series A Preferred Stock and the Series B Preferred Stock.  The Company is also pursuing a listing of its Common Stock on both the TSX Venture Exchange and the NYSE AMEX.

We also filed a prelease release and a Current Report on Form 8-K filed today with the U.S. Securities and Exchange Commission.  Please refer to both of those publically available documents, the former on our website and the latter on www.sec.gov.

In addition, we have updated the Company Overview presentation located here.

Kindest regards,

Corrado De Gasperis
President and CEO