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Comstock Mining announces accelerated payment on Lucerne transaction

Published by , Editorial Assistant
Global Mining Review,

Comstock Mining Inc. has announced an update on the completion of the sale of its Lucerne properties. Tonogold Resources, Inc. has accelerated paying the non-refundable, US$3.5 million stock-based component of the purchase price.

This represents 3500 shares of convertible preferred stock with a stated value of US$1000/share plus a commitment fee of an additional 420 shares of convertible preferred stock with identical terms, in lieu of the US$650 000 cash payment due this month.

On 24 January 2019, the company entered into the Tonogold agreement for the sale of its Lucerne properties to Tonogold for US$15 million (representing US$11.5 million in cash and US$3.5 million in stock). This amendment simply reflects the acceleration of the US$3.5 million stock-based component of the purchase price, previously agreed upon, in lieu of the US$650 000 cash payment due this month. The US$3.5 million will be paid in a convertible preferred stock with the post-closing conversion price being the lowest of the 20-day volume weighted closing price of Tonogold shares prior to conversion, Tonogold’s most recent private placement or Tonogold’s initial public offering price. If the closing does not occur within the amended timelines, the stock is automatically convertible at 85% of the then current volume weighted average price.

Corrado De Gasperis, executive chairman and CEO, stated, “The early receipt of this payment from Tonogold demonstrates the good, ongoing progress towards finalising the Lucerne transaction. We have now received almost US$6 million in cash and stock out of the US$15 million closing component of the purchase price, plus the additional commitment fee. We look forward to closing this transaction in June, eliminating our debenture and accelerating the deployment of our strategic growth plans.”

The amendment does not change the requirement that Tonogold reimburses the company for the monthly interest expense on the company’s Senior Secured Debenture, and the more than US$1 million in annual operating expenses associated with the American flat platform, both effective and beginning on 1 June 2019, regardless of when the sale closes. Tonogold also retains the option to extend the closing for two additional months, upon the payment of two additional, US$1 million non-refundable deposits.

Comstock anticipates Tonogold to deliver US$11.5 million in cash at closing, less the total amounts of the cumulative non-refundable cash payments made by Tonogold at that time, currently totalling US$2.35 million.

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