Comstock - Q3 2024

Transcript

Trevor Brucato (Head of Investor Relations)

Welcome, everybody, to Comstock's Third Quarter 2024 results and business update. This is Trevor Brucato with RB Milestone Group, Comstock's U.S.-based investor relations firm. Comstock is listed on the NYSE American under the symbol LODE, and joining us today is Comstock's Executive Chair and CEO, Corrado De Gasperis, and COO, William McCarthy. I'd like to thank the hundreds of investors who registered for today's event. We received your questions during the registration process, but if any new questions surface, please submit them in the Zoom Q&A module, and we'll do our best to address them following management's prepared remarks. Please note this presentation is being recorded today, October twenty-second, twenty twenty-four, and will be made available on the company's website at comstockinc.com shortly after today's event. Again, that's comstockinc.com.

I'd also like to thank those who participated in Comstock's Q3 Stakeholder Perception Analysis report that was published on October 3rd and portrayed a positive shift in investor sentiment compared to previous quarters. In the coming days, we'll be opening up the surveying for the fourth quarter. We'll be circulating the link to registrants and subscribers by email, but it will also be available on the company's website at the top of the Investors section. As a reminder, the final report includes trends on Comstock's perceived strengths, weaknesses, and milestones and will be published shortly after the end of the quarter. Your participation will be much appreciated, as it will continue to help strengthen Comstock's investor communications efforts and guide the focus of our upcoming events.

Please note, today's presentation may contain forward-looking statements that are subject to risks and uncertainties that may be out of Comstock's control and should not be construed as a recommendation or solicitation to buy or sell any security. For the company's full disclaimer, please visit comstockinc.com. Lastly, RBMG, RB Milestone Group, is not a registered investment advisor or a broker-dealer. For more information on us, please visit rbmilestone.com, and now it is my pleasure to turn it over to Comstock's Executive Chair and CEO, Corrado De Gasperis. Corrado, the stage is yours.

Corrado De Gasperis (Executive Chair and CEO)

Thanks, Trevor, and hello, everyone, and welcome to our third quarter update. I'm very happy to report that we have positive updates, insights, and outlooks on all three of our businesses and a meaningful number of expanded partnerships that have positioned our system and capacities in a way that has already altered the way the market perceives us and is engaging us. It's truly gratifying to see all of our teams getting this traction across the board. Similar to our last call, we'll take live questions after these prepared remarks. I'll cover corporate first, since we have announced some very meaningful transactions, ranging from recent partnerships with the Department of Energy and the National Renewable Energy Lab to our previous announcements regarding capital with SBC. Then Billy will update you on metals and mining, and I'll wrap us up with Comstock Fuels before turning to questions.

Okay, so from a corporate perspective, I'm happy to update that I've spent the past two days with SBC and our capital partner, and we are methodically moving forward. We're genuinely, genuinely excited with how we have positioned Comstock Fuels, Metals, and Mining, and the opportunities we are now capitalizing on. We are deep in the due diligence structuring process with SBC and believe we have the high-level structure well outlined to facilitate the capital. Some of you have asked about equity versus debt, and we're just trying to optimize the structure for the businesses and our shareholders. These monies are specifically designed to fund each of our businesses with the right amount of the right capital to accelerate their commercializations, capture their markets, and exponentially grow value while taking maximum advantage of our net operating loss carryforwards and maximizing company-wide value.

From the remarkable technological and market advances that both Fuels and Metals have achieved in just the past three months, plus this recent surge in precious metal prices, people are really starting to appreciate the potential value coming from what we are creating. There is some complexity here, and everyone needs to be just a little patient as we work through the tranches. They're coming, and we're committed to maximizing the value of the enterprise in the safest and best way. Our liquidity remains stable as we close on some other minor asset sales and the previously announced $1.5 million convertible note while we advance with SBC and, frankly, some other capital transactions. I stated on the call last time that I expected us to be a bit over 200 million in shares, and we're now at 209 million outstanding.

From a corporate transaction perspective, we announced a binding agreement to restructure and own 100% of GenMat's material science discovery business, including the material science AI technology, the related material science team, and the associated know-how and IP. We're doing it without issuing new shares or cash, but rather assuming the team and the tech into what will become both Comstock's AI engine and its own business. Conversely, the satellite-to-satellite software and the space-based employees, as well as the small investment in Extropic, will go to Deep in a new venture that we understand will be called Starvasa. Our focus is, has been, and will remain material science. We're 100% focused on it, and we could not be happier to have our own team 100% dedicated to material science breakthroughs with dramatically less required spend and dramatically less required capital outlays.

We also expect to develop an AI business with external customers while supporting all the advances of Comstock's own breakthrough materials... Speaking of Comstock, we've done a tremendous amount. We've achieved a tremendous amount in just the past three months. As you've read, Comstock Innovations announced a truly landmark agreement wherein we acquired the exclusive rights for lignocellulosic IP that was developed by the National Renewable Energy Lab and MIT in conjunction with the Department of Energy. This tech is exclusive to Comstock, and includes substantially all of the world's different woody biomasses within those patents. The market is starting to understand that there is really no way to produce even a small fraction of the required renewable fuels, of the required sustainable aviation fuel, without an abundant, extremely low-carbon feedstock. Most people are starting to understand that woody biomass is the only practical answer. We have the technology.

NREL has acknowledged this, and the leadership of our enabling technology, making our technology platform, and frankly, our global team, second to none. We've consolidated the IP into our platform, and we're jointly developing the next generation of higher yields, lower CI scores, and significantly lower costs. We didn't go to NREL, and NREL didn't come to us just to combine an IP portfolio. They wanted to, and we are very receptive to working with them together on the opportunities that they've identified, the breakthroughs that they've already advanced, to get to this significantly lower CI score, significantly lower cost, and next generation of higher yields. Let me comment on metals and mining. Revenue's ramping up rapidly, and the market is expanding for us almost daily. Billy's gonna walk you through the update, and then I'll come back around, and I'll wrap it up with the fuels update.

Billy, please go ahead.

William McCarthy (COO)

Thanks, Corrado. So to start, let me refresh everyone on some of our core thinking on the energy transition. I'm gonna include both the what and the when, and when I say the what I mean, you know, what technologies do we think are gonna make a real impact? And when I say when, I mean how these markets are gonna evolve over the coming decades. And our core thinking and focus today leads to this core assumption, that in the energy transition, where we go from producing the majority of our energy from fossil carbon to producing the majority from biogenic carbon and other renewable sources, there's no question that we definitely need more metals. We need them for all stages of energy production, transmission, and storage. So simply put, the energy transition needs metals, and I don't just mean exotic and rare metals.

Precious metals are a big part of this story, too. Silver has already emerged as a crucial resource necessary for the energy transition. Demand for silver by solar panel producers has nearly tripled since 2021. You may have seen the recent news from Samsung about a solid-state silver battery. We think this is an exciting early development, but in our opinion, it's only just the beginning of a new energy storage industry, generating substantial demand for silver and other metals in the coming decades. Both our Comstock Metals and Comstock Mining businesses are positioned to capitalize on this opportunity. We're seeing the price of silver over $34 today, continuing to move towards $35 per ounce. It's been over a decade since we've seen prices like this. Many in the market are looking for a breakout even higher, one that can test historical highs.

On the gold side, we've seen strength all year, and we think it's here to stay. With gold as a safe haven asset, a hedge against policy and inflation effects on other asset values. Geopolitical conditions around the world are unstable on multiple fronts. The global monetary system is pushing boundaries we previously thought were impossible, and new gold discovery continues to lag historical norms. Yes, gold prices are at all-time highs, but we see a long way to run. We agree with the recent call by Bank of America strategist, Michael Hartnett, that gold is heading well above $3,000. This opportunity is setting up perfectly for us. We have known resources in the most significant mining district in the United States, with a mature infrastructure and team on the ground in place. All the necessary pieces are there to move fast.

Our team has spent the past year sharpening pencils and laying out the plans for the next steps. Our latest independent technical report on the Dayton Consolidated, published in 2022 by Behre Dolbear, estimated, measured, and indicated mineral resources containing 293,000 ounces of gold and 2.1 million ounces of silver, plus an inferred mineral resource containing an additional 90,000 ounces of gold and 480,000 ounces of silver. As we look forward into next year, we're planning to start work on the preliminary economic analysis for the Dayton Consolidated resource, the first step in advancing the project to production, which we intend to do on the shortest possible timeline. Beyond the Dayton, we're working up exploration and development plans for our other mineral targets in the southern district, south and west of the Dayton.

as well as the Lucerne, Woodville, and Succor Valley targets in the Central District. We're planning to put all of these assets to work, and then when we're done mining, we're committed to reclaim, redevelop, and leave the district better than we found it. That's gonna be a big plan, and it's gonna take years to reach that goal. For the immediate future, we're focused on developing our targets, getting to production, and realizing the value of these resources in Dayton, Spring Valley, Lucerne, and the satellite claims. Corrado and I will be at the New Orleans Investment Conference in late November with the team, where we'll be presenting more on our plans for Comstock Mining in 2024 and beyond. You can look out for us to release more information on our website ahead of that conference.

Now, let's pivot to talk about a different kind of mining, what we're calling urban mining. Comstock Metals is collecting and extracting a non-virgin silver resource. This is the same silver we pull out of the ground on the Comstock. It's just a different source of ore and a different process. Today, nearly 18% of global silver supply comes from recycling, and 19% of that supply goes to solar panel manufacturing. As solar panel production increases, so does demand for silver. As 10 and 20-year-old panels reach end of life, the opportunity to expand recycled supply of silver is more than substantial, and Comstock Metals is on track to become a significant silver producer. On the operating side, our team found and filled another meaningful gap in the supply chain this quarter.

Before the end-of-life solar panels can be recycled by Comstock Metals, they need to be disassembled, removed, and transported to our facility, what's known as decommissioning. After winning our first bids with a full-service offering that included decommissioning, our team was able to quickly mobilize our network of contractors to these sites to begin the work of decommissioning panels and transporting them to us within days. This expanded offering added $80,000 to revenue in Q3, but that was from only a few days of operations in late September. We're confident this new capability adds significant strength to our market position versus our competition. Now, strategically, we established this business in the Southwest U.S., locating first in Nevada because the region has the largest concentration of old solar panels nearing end of life, but there are aging panels in every state.

In recent months, we've seen increased demand from customers outside our region and across the country. These customers are willing to incur the increased freight costs to use our services. We're competing and winning against what are effectively lower-priced alternatives, lower priced because we're further away, and I think this is a powerful statement to the quality of service and the exceptional value proposition offered by the Comstock Metals team to the market. In the near term, through the end of this year, we're focused on continued development, including state permit submissions for our first industrial-scale processing facility in Silver Springs, Nevada, and county permits for additional storage capacity. Looking out to next year, in addition to the Silver Springs expansion, we're planning site selection and permitting kickoff for additional facilities in the Southwest. Plus, you're gonna continue to hear and see more details on our plans for expansion nationally.

It's happening now. So yeah, I'm very excited for where we are and the pace that we're moving in both metals and mining, and look forward to a strong Q4, setting up for a very busy 2025. I'll stop here and turn it back to Corrado.

Corrado De Gasperis (Executive Chair and CEO)

Thanks, Billy. I may be a little redundant on some of my comments here, even though I knew what you were gonna say, but really just to emphasize it, our metal recycling business is developing much faster, broader, and stronger than we originally anticipated, giving it a tremendous outlook. Both metals and mining are extremely well-positioned, and we aren't no way letting up. On the contrary, we're moving forward full speed, as Billy just outlined. To be sitting with such a unbelievable silver resource from both sources is joyful. Okay, let me wrap up by moving into fuels. As we previously announced, the fuels team has now validated, with strategic customers, higher yields of up to 125 gasoline gallon equivalents.

We were frequent in saying when we were over 100, that we were nearly double the next technology's performance or yields. We are well over double the next technology's performance and yields, with up to 125 gasoline gallon equivalents from just one dry ton of wood, and we're in the final stages of securing a bolt-on gas-to-liquids, if you will, technology from one of our longtime industry-leading technology partners out of Tulsa, Oklahoma, Emerging Fuels Technology, whose gas to liquid circuit will convert that additional carbon emission into up to 15-20 more gallons of sustainable aviation fuel, pushing our yields to over 140 gasoline gallon equivalents per ton of dry wood, and at the same time, lowering our already extremely low carbon intensity score. In our industry, by the way, the lower the CI score, the higher the revenue.

The planned developments with NREL should further enhance these numbers, potentially increasing yield, certainly reducing operating costs and CapEx, and hopefully putting us in striking distance of achieving cost parity with petroleum. This is our obsession. We understand that cost parity with petroleum is a real stretch goal, but the plans to get there are already developed. The experiments have been designed. They've been started. With who? An extraordinary list of partners, including NREL, and that, if successful, even better positions us to truly and sustainably decarbonize all of mobility.

During the quarter, we announced our first three independent commercial fuel agreements with South Australian Carbon Limited, or as they go by, SACL, for the delivery of three different biofuel production facilities, including one starting at 250,000 metric ton per year refinery, which will be located in southeastern Australia, a second 250,000 ton per year refinery in northwest Australia, and a third 750,000 ton per year refinery located on the east coast of northern Australia. Under the agreement with SACL, Comstock Fuels will contribute site-specific technology rights in exchange for a 20% stake in each refinery, plus a royalty fee equal to 6% of each refinery's revenue, and on top of that, pre-production engineering fees equal to 6% of total capital and construction cost.

Some people might say, "Well, wow, that's a pretty good negotiation." But it really wasn't a hard negotiation, because typically, when you construct a multi-billion-dollar or three ultimate multi-billion-dollar projects, it's common for the engineering, construction, and procurement firm to charge about 15% of total capital and construction cost. What we were able to demonstrate to our partners was that we do at least a third of that work for them. We do the preliminary engineering. We can order equipment. We can support the commissioning of these facilities. So we're gonna get 6% of what is typically a 15% fee. Those fees alone could approach $150 million in revenue for Comstock Fuels over the next three, four, five years, depending on the pace at which they commercialize their three projects.

Yet, this is just the tip of the iceberg for fuels. We expect another international deal in the near term and multiple commercial agreements in the United States. They'll include offtakes, site selection, first facility, and feedstocks. We finalized our full business and financial plans for fuels. It's been updated now based on 125 gasoline gallon equivalents, and that plan includes building our own profitable commercial scale demonstration facility. Should sound familiar. We're building a demonstration scale facility that will be profitable. It's sized for 50,000 dry tons of woody biomass per year or higher. That could produce over 6 million gasoline gallon equivalents or higher per year.

And once that's up and running, then building three more industrial-scale facilities, if you will, that could utilize potentially up to 1 million dry tons of woody biomass, and that would represent, if we're using the EFT gas-to-liquids circuit on top, potentially up to 140 million gasoline gallon equivalents of fuel per year per facility. That's what the $200 million in capital was designed for. It's the exact number that we have slotted into our model, because about $150 million of that is dedicated to the 50,000-ton-a-year commercial demonstration-scale facility. That model, with just the demonstration-scale facility and three industrial-scale facilities and a few licensees, reflects a multi-billion-dollar valuation based on discounted cash flows. It is robust.

That $150 million is dedicated to deploying that demonstration facility, as I just mentioned. It will include the first site selection, the final engineering, the permits, the construction, and operating it, and those are the conversations that we're having. You know, are we co-locating it with a refinery? Are we co-locating it with a feedstock source? The answer is yes, yes, and yes. We have choices now. Many of our commercialization partners are also negotiating for the right to also invest in Comstock Fuels. So there's a really strong, let's call it, project and capital pipeline that's developing here. The business is definitely in a new state of reality, with our yield profile compelling the market to us as we engage the market, and coincidentally, we'll be engaging most of those strategic partners starting tomorrow at the Advanced Biofuel Leadership Conference based in San Francisco.

Our goal is precise as a company. We're accelerating the commercialization of decarbonizing technologies. These are hard, impacting, but practical technologies. We're now doing it across the system, and all of our businesses are getting tremendous traction. Even our mining assets, which Billy referred to, with gold today at nearly $2,750, and as Billy highlighted, we all believe heading much, much higher. Silver well over $34.50 for the first time in over a decade. Remarkably, with just three Nevada-based recycling facilities, urban mining, if you will, operating at 100,000 tons per year each, and assuming and estimating the low end of the silver grades that we've experienced so far, non-virgin, we could easily be in the top three silver producers in the state of Nevada, which is saying a lot. Most of you already know that Nevada is the Silver State because of the Comstock Lode.

We couldn't be prouder, and yet we're just getting started with those three facilities in the Southwest region. To summarize, and before turning to questions, the metals business is at two shifts and preparing to move, with training going on right now, to a third shift. As Billy mentioned, potentially tripling combined revenues again in the fourth quarter versus the third, including those decommissioning services, while we prepare to file our remaining state permits for our first 100,000-ton facility right here in Silver Springs in the next few weeks, and then starting to assess the next few Nevada sites as the business starts taking a national versus regional ramp-up beyond that. Mining with the higher gold and silver prices continues to inherently accrue value. These are our assets, just based on the known gold and silver resources that we have here in the ground that Billy referred to.

The capital that's coming in for that will allow us to expand the resources, expand the mine plan. But even without expanding the Dayton mine plan, we're pushing nearly $400 million in free cash flows when we start considering these higher-priced resources at the higher grade cutoffs. It's a staggering amount of money, maybe not at all reflected in our market cap. Fuels, we're gonna announce 2-3 transactions, as I mentioned, domestically, both domestically for sure, and possibly internationally during this fourth quarter. But we'll have multiple transactions announced, further validating and expanding our growth. We'll start bringing strategic capital, and which will result in a quickening of all of these activities. But rest assured, we haven't slowed our efforts despite lean resources. So with that summary, Trevor, I'm keen to turn to questions, please.

Trevor Brucato (Head of Investor Relations)

Thank you, Corrado. Thank you, Billy, and congrats to you guys and the teams across the Comstock platform for a successful quarter. For everybody that is interested in asking a question, you can submit those in the Q&A module, and I'll try to keep this by topic here across the metals, fuels, mining, GenMat, and SBC slash corporate type of topics here, so on the metal side, let's kick off with that. How many tons of end-of-life panels are presently stored at Comstock's warehouse? And any color on storage capacity?

William McCarthy (COO)

Sure, Trevor. We have a lot of capacity. We currently have, you know, over 300 tons in storage. And, you know, everyone may recall, we process about two tons per shift in the existing facility. But that said, you know, we received permits earlier this year for much expanded storage, you know, enough really to be sufficient for the first industrial-scale facility, 100,000-ton facility in Silver Springs. So, you know, we're working through the market, developing the market. This is really a huge advantage for us. It's letting us develop that market, get the sales pipeline grown and operating before the facility is operational, so that we can really hit the ground running once we're there.

Trevor Brucato (Head of Investor Relations)

Thanks, Billy. It is interesting, I mean, this urban, quote, unquote, "urban mining operation," with where silver prices are, you know, talking about, you know, you guys being a potential producer here or a larger-scale producer of silver, it's... it makes you question, okay, so what's really coming out of these panels? So the question here is: You have already successfully sold aluminum from recycling the end-of-life solar panels. What about the other valuable materials in the panels, and are you stockpiling them on-site at the moment?

William McCarthy (COO)

Yeah, it's a good question. So, you know, there's three streams really that we look at coming out. One is the aluminum, which we're currently selling. Two is the glass. We're having a lot of conversations with different, you know, users of that glass and really trying to find the right home for it. It's really not a question of if, but just a question of who and when we put that in place for the long term. You know, the third stream is, you know, the ore, the solar panel ore, or, you know, regulators are calling it tailings. But this is the material that has metal content, has silver in it, has other, you know, critical metals, other recoverable metals. And this is this stream, you know, there's two things going on today....

Okay, on one side, the metals team has, you know, people beating down the door, looking to talk to us about this material. And, you know, we're gonna be making some announcements soon for some initial agreements and some initial sales in the next few months. You know, and the prices we're seeing that people are willing to pay for this are really substantial as well. It really shows, you know, this shortage in the silver market and what it's gonna come. We're seeing it on the ground floor, you know, in the market for this material. Now, at the same time, you know, we know a couple things about extracting silver from ore.

And our mining team has been working with our, you know, processing consultants, as well as our internal team, you know, not to ask, "Can we extract it?" but really to look at, "Can we do it in a way that's more efficient and more profitable than selling it to a third party?" And, you know, I'd say as it is right now, the answer is maybe. And, you know, we'll probably have another six months or a year to really get to the point where we know for sure. But in the meantime, the markets are very robust, and there's a lot of demand for that material.

Trevor Brucato (Head of Investor Relations)

Thanks, Billy, and, you know, some of you have probably heard me say, I mean, this urban mining operation is essentially avoiding the exploration risk. You're identifying the feedstock, the end-of-life feedstock, solar panels, and processing those, and essentially becoming a quite nouveau type of business here that Comstock Metals is embarking on. So kudos to you and the team. So additional questions here have come through, but let's shift a little bit more towards mining. So going from urban mining to, say, traditional mining, it is exciting to hear that Comstock is reactivating, if you will, its historic gold and silver mining assets in Nevada.

Billy, I know that, you know, there's gonna be more news coming out here around the New Orleans conference, but any clarity leading up to, you know, any plans leading up to that PEA, you know, in the new year, related to Dayton and any of the other assets?

William McCarthy (COO)

Yeah, well, look, and let me say a couple things, and Corrado, I'm sure Corrado has a lot he wants to say about mining, too. I know he's just as excited as I am. You know, look, the Dayton is the number one priority. It's where we have the most work, the most current work, and we've got a fairly well-defined plan that our team has been working on, you know, again, over the past year, which is really about getting a fast track towards production. You know, again, what you're gonna see next year is that we're gonna be doing this preliminary economic analysis. This is really formalizing this plan, right, with the independent consultants, and getting everything lined out, so we can move down the line, ultimately to permitting and then to production.

So, you know, Dayton is at the top of our list, but worth noting that, you know, the whole district is still there, and there's a lot of value in it, so we're looking at this as a staged plan, you know, starting with the Dayton and not really stopping until we've seen the full realization.

Corrado De Gasperis (Executive Chair and CEO)

I mean, I would only add that, you know, when you're talking about exploration and development, you always have this risk hurdle, right, of achieving economic feasibility. And the fact that we have an economic mine, we're majorly de-risked, so we can start stepping out and growing those resources, you know, without, you know, a fatal fail. You know, we know once we define the resource, we can start mining, frankly, you know, at our leisure, at our decision point, you know? So because we've got infrastructure, because we've got legacy permits, because we are intimate with the permitting regime, because we have such a great amount of known geology, it's relatively low risk adventure. With the metal prices continuing to move up, it makes it exciting.

Trevor Brucato (Head of Investor Relations)

Yeah, it's worthwhile mentioning that it, this is not a grassroots type of operation. That this has been around, and you guys have advanced it. So I'm sure stakeholders are looking forward to what's to come here on those mining assets. Let's shift our focus a little bit more towards the GenMat deal. How should investors be looking at Comstock's GenMat AI business for material science going forward? And is GenMat Satellites still planning on analyzing Comstock's mining assets?

Corrado De Gasperis (Executive Chair and CEO)

Yeah, good question. So I mentioned in my prepared remarks that we're all about the material science development. This is foundationally strategic to us. The reason we invested in GenMat in the first place was because we believe if you're in the business of developing materials through technology, and you're not using these type of simulation, these type of, artificially intelligent, compute horsepowers, you're gonna be a dinosaur. So we don't have any interest in being a dinosaur. We've learned a tremendous amount over the last four years. We've developed a tremendous capability over the last four years, and then that ability expanded, right? It expanded. Deep has strong vision. He sees forward.

You know, his desire to put the satellite into orbit was tied towards developing more artificial intelligence, geospatial, geophysical, you know, and ultimately, we rationalized that it made sense for us to support that because it could benefit the Comstock.... So part of our agreement remains that any information, any geophysical modeling, any geophysical planning that we've been doing in connection with that GenMat team, we get the benefit of. Secondly, when they're ready, willing, and able to scan the Comstock district at no additional charge, they will do those geophysical scans, those hyperspectral scans, and provide us that data. We always viewed that additional data, that additional capability, as a bonus for us, because we have a tremendous amount of geological knowledge, structural, you know, metallurgical, geochemical. We already have it. We have a tremendous amount.

That's what made the Comstock an ideal training ground for the AI. So we'll get that data. We'll continue to expand the district the way that Billy described it, intelligently, with that information. But really, that foray into space with that satellite created additional opportunities, and so, there's a huge opportunity, right, for spacefaring. I think Deep's going into it with a passion and a knowledge that we support, but it's not directly consistent with our material science development thesis, which created the opportunity. Now, that business, you know, he would need to speak to. Obviously, it's developing, it's nascent, it's exploding, all of the above. The material science discovery business is a little bit more advanced, still requires development, still requires, you know, competency. So we're thrilled to add to our innovation capacity, those resources.

But as I said, if we develop what we need to develop, and it will be in a more Comstock-focused solution way, there's no reason we wouldn't be selling that services to others. There's no reason that line of business couldn't have its own tremendous value, but we want it to benefit Comstock directly first. Same idea, use our material developments, our material advancements, as the training ground to develop technologies and tools that we can use and hopefully sell and have others use.

Trevor Brucato (Head of Investor Relations)

Thanks, Corrado. There's also worthwhile mentioning a slew of data, historical data on the mining asset to begin with. So that's probably-

Corrado De Gasperis (Executive Chair and CEO)

Mm-hmm

Trevor Brucato (Head of Investor Relations)

... has your hands full already.

Corrado De Gasperis (Executive Chair and CEO)

Yeah.

Trevor Brucato (Head of Investor Relations)

Another question here on GenMat. So Comstock's, you know, you guys mentioned that there's no new issue of cash or shares related to this GenMat deal. Can you explain how the $1 million payout will be funded?

Corrado De Gasperis (Executive Chair and CEO)

Yeah, so we, you know, look, we previously funded GenMat, you know, through... And so by divvying up the assets, you know, we're able to fund that $1 million without additional disbursements coming from our treasury.

Trevor Brucato (Head of Investor Relations)

Sounds good. Okay. All right, let's shift over to fuels. As part of the SBC deal, $200 million is earmarked for your fuels subsidiary business. You touched on this earlier, Corrado, but can you comment on how a debt equity structure versus just equity would change SBC's originally proposed ownership of 40% in the subsidiary?

Corrado De Gasperis (Executive Chair and CEO)

Yeah, no, it's I mean, I think it's a relatively straightforward answer. You know, if you're using some debt in your capital stack or in your capital structure, you don't get ownership for debt, right? So we're trying to optimize the capital stack, and we're also trying to position the company for maximum value creation and practical and safe value creation, so we're being very thoughtful about those pieces.

Trevor Brucato (Head of Investor Relations)

Thanks, Corrado. It was mentioned that the binding contract Comstock Fuels landed with SACL is anticipated to bring in around $150 million in revenue from the engineering fees alone, over the next 3-5 years.

Corrado De Gasperis (Executive Chair and CEO)

Yeah.

Trevor Brucato (Head of Investor Relations)

Can you talk about SACL's upfront payment obligations?

Corrado De Gasperis (Executive Chair and CEO)

Yeah, so the way it's structured, we would get for the... There's a nuance, right? For, we're requiring them to build a 50,000-ton facility first, and then scale it up to 250. The beauty of that is it can be done on the same site with the same assets, okay? So when we're doing the 50,000, there's a 3%, you know, fee. When we move up to the 250,000 and above, it's a 6% fee.

And so as soon as the site license is granted and the first entity is set up, not only do we get 20% of the equity, as I mentioned earlier, but we get an upfront $2.5 million payment, and then it would be 6%, right, of the capital and construction costs that move from there. I don't have a view of the final project schedules and how they overlap. Certainly, we will start one, and it'll start moving forward, engineering fees, $2.5 million plus then some stream. Then another one will start, $2.5 million+ some, you know, stream.

And then, there'll be some point where, you know, they have the most going on, and then it'll tail down, and hopefully, once the facilities are commissioned, it'll shift from an engineering fee to a royalty on revenue.

Trevor Brucato (Head of Investor Relations)

...Congrats on the MIT-NREL partnership. Can you emphasize the importance of this partnership, and would you say that this might expedite your process, the team's process, in establishing a footprint in the United States?

Corrado De Gasperis (Executive Chair and CEO)

Yeah, I mean, look, ironically, it feels like the, the benefit that we've gotten from that so far has been credibility. You know, I think when the highest technological counterparty in the industry, in the space, is picking our technology as a leading platform, picking our solution as the one to invest and build on, it's validating. So that's great, okay? It's validating. We were way more excited at the breakthroughs that they had identified on the bench, at the breakthroughs they had identified moving toward TRL 3, and we were like: "Holy crap!

Okay, we will fund the acceleration of those activities, obviously, with the goal of getting to TRL 6, TRL 7. The beauty of those developments, though, is you don't get to TRL 6 and then say: "Hey, let's go build a plant," like you normally would. You get to TRL 6 and you say: "How do we upgrade our existing commercial demonstration scale facility? How do we enhance it? How do we accelerate it? How do we cut two steps out of its process and reduce CapEx by 30%? How do we reduce operating expense by 30%? How do we increase yield? How do we make an SAF with an energetic profile that doesn't require blending, 100% SAF?" These are the things that are on the table that they have already validated to certain degrees of technology readiness, one, two, three, right?

And we're saying: "Wow, let's move those forward together." And when we say together, we don't just mean funding them. We mean there are certain activities that will be tested and piloted in our Wausau, Wisconsin laboratory. There'll be certain activities that'll be tested in Colorado. And so it's a remarkable, remarkable thing. Remarkable, remarkable thing. We could not be more excited. We have other development projects also internally. We have other development projects that we've disclosed, without talking about who they are and exactly what they're doing, externally. And when you put all of those together... And I know this takes... Right? You know, you're not gonna get 100% hit rate timely on everything that you do, but you're gonna see the leading platform get better and better and better. In our view, whoever is chasing us, we're- they're gonna get smaller and smaller behind.

We're moving faster, further ahead in designs and in objectives than what anybody's even talking about working on to get to where we are today. We don't know anybody that's doing that, so it's, it's tremendous.

Trevor Brucato (Head of Investor Relations)

Seems like they are the perfect personnel to get you guys to cost parity with petroleum.

Corrado De Gasperis (Executive Chair and CEO)

Mm-hmm.

Trevor Brucato (Head of Investor Relations)

On the capital markets front, capital needs and so on, SBC, shifting over there a bit, there seems to still be some confusion on NYSE American listing requirements versus Nasdaq. Can you quickly touch on anything related to this, whether it be delisting or a reverse stock split-

Corrado De Gasperis (Executive Chair and CEO)

Yeah

Trevor Brucato (Head of Investor Relations)

... just to put this to bed?

Corrado De Gasperis (Executive Chair and CEO)

Yeah, yeah. People, people keep asking us, if we're below a dollar, are we at risk? And I think, frankly, just simply they're confusing us with the Nasdaq. So the New York Stock Exchange AMEX listing, the Market Exchange that we're on, doesn't have that dollar limit. It's a much lower number. We're nowhere near it, and, you know, we've been on the New York Stock Exchange for 14 years, so, we're very, familiar with it. So it's just. I think it's just confusion.

Trevor Brucato (Head of Investor Relations)

Thanks, Corrado, and you mentioned that Comstock liquidity remains stable as you close on some other minor asset sales, and previously announced $1.5 million convertible note to top up on the existing one. If you can provide a little color on this, and the capital needs and so on moving forward here.

Corrado De Gasperis (Executive Chair and CEO)

Yeah. Look, we've got that liquidity coming in. You know, we're gonna try to get that first $5 million in the door with SBC. We've had a great couple of days. It's coming, so we're happy about that, right? And then we'll bridge that to, you know, the bigger capital funding, and then hopefully we're not having these conversations anymore.

Trevor Brucato (Head of Investor Relations)

Corrado, we are coming up here on the hour, so I'll put the ball back in your court for any final comments.

Corrado De Gasperis (Executive Chair and CEO)

Just to summarize, you know, I really, I really want to emphasize that, you know, the discussions about, you know, professional funding are all tied to a relatively high level of sophistication in our financial models. We have sophisticated model and business plan for fuels. Annoyingly and joyfully, we've been updating it quite a bit over the last 3-6 months because of enhancements, so that's really, really great. You know, metals, we've been updating because the average revenue per panel has been above our expectation, because the realized revenue from selling renewable clean materials is above expectation, because we have decommissioning services... and then with our mining assets, you know, the precious metal prices keep going up. You know, you can change the price in the model. That's simple.

But I think most people appreciate that when the gold price goes up, the cutoff goes down, which means you have to re-engineer the mine, resulting in more tons of ore and less tons of waste. The strip ratio improves dramatically, and so that's what's happening, you know, you know, with the mine plans. But then all that management effort to determine what does it take to build three industrial-scale plants for metals? What does it take to build these facilities for fuels? That's a lot of engineering. That's a tremendous amount of engineering. I mean, in fuels, it's exponentially higher amount of engineering than it is in metals, but it's still a lot, and those permits have to be ultimately submitted with those engineering plans. More importantly, we have to have project schedules. More importantly, we need to know what the spending is.

So the reason we're successful in attracting specific capital, both from SBC and from our strategic partners, is 'cause they're able to validate those models, and validating those models is not a financial jockey sitting in a cubicle, right, reviewing the Excel spreadsheets. On the contrary, it's you know, it's petrochemical engineers visiting Wausau. You know, it's chemists assessing, you know, our metal recycling. These are all science-based, you know, businesses. It's you know, mine engineers and geophysicists assessing our mine plans. So we feel very, very good about the foundation that we've built. It's very substantive. We wish it had happened sooner. You always wish that we had gone faster, but we're not disappointed with the results. We're extremely excited about the results, and we look very much forward to what's going to happen over the next six weeks.

We look forward to talking to you when it happens, announcing it, and then, of course, circling back early in the new year for the annual results.

Trevor Brucato (Head of Investor Relations)

Thank you, Corrado and Billy, and thanks to everyone for joining today for Comstock's Q3 event. Please keep an eye out for today's recording and Comstock's brief Q4 investor survey, which will be circulated by email and posted on the company's website at comstockinc.com. If you have any questions, please feel free to email us at [email protected]. Again, that's [email protected], so management can review and respond to them accordingly. Thanks again. That concludes today's event. We look forward to keeping you all posted on the progress throughout the rest of 2024. Thanks again.

Corrado De Gasperis (Executive Chair and CEO)

Thanks, Trev. Outstanding. Thanks, Billy. Have a great day.