VIRGINIA CITY, Nev., Sept. 09, 2020 (GLOBE NEWSWIRE) -- Comstock Mining Inc. (the "Company") (NYSE:LODE) and Comstock Northern Exploration, LLC ("Comstock"), a wholly-owned subsidiary of the Company, entered into a Mineral Exploration and Mining Lease Agreement (the "Lease") with the Sutro Tunnel Company ("Sutro"), in order to lease certain patented mining claims, exploration rights and town lots in the Gold Hill and Virginia City Mining District in Storey County, Nevada (collectively, the "Sutro Properties"). The Company previously had exclusive rights to explore and mine these same properties and mineral claims beginning in 2008.
The Lease is assignable by Comstock and these properties make up part of the Lucerne mine properties and part of the Mineral Exploration lease with Tonogold Resources Inc. ("Tonogold"). Tonogold is a strategic partner and investee of the Company, and they recently announced the commencement of an initial and major exploration and evaluation of Comstock Lode properties including the Occidental Lode, the Lucerne and many of the most historic bonanza's including but not limited to the Collar Potosi, Belcher, Overman, Gould & Curry, Consolidated Imperial, Woodville, Crown Point and Yellow Jacket mineral properties, where historic production recovered over 8 million ounces of gold and almost 200 million ounces of silver. The Company has preferred shares convertible to 33.2 million Tonogold common shares.
Tonogold has also announced that it recently completed a $4.25 million equity capital raise, over $6 million in cash and an additional $3.5 million in drilling equity credit, fully funding an estimated $7 million initial drill program, in one of the most historically significant portions of the Comstock Lode. Tonogold's initial drill program will focus on the nearly 2-mile mineralized strike where most of the historical production came from above approximately 1,600 feet in depth, where more favorable mining conditions were enabled by the dewatering of the Sutro Tunnel. Tonogold has conducted extensive research and uncovered mining reports and data that indicate significant potential for higher grade discoveries, at depths consistent with and below 1,600 feet.
The Lease has a term of up to 20 years or longer, with a 4% net smelter royalty payable to Sutro. The Sutro Tunnel Company is a wholly-owned subsidiary of Pelen Limited Liability Company ("Pelen"). The Company previously acquired and owns 25% of the outstanding equity of Pelen. In connection with entering into the long-lived Lease, the Company purchased an option (the "Option") to acquire the remaining 75% of the equity of Pelen (the "Pelen Equity"). The Option has a term of up to three years. The Option is exercisable so long as the Company makes payments of $100,000 per year ($100,000 of which was paid by the Company upon signing the Option). Pursuant to the Option, the Company is entitled to purchase the Pelen Equity for $3,750,000 if exercised within one year, with an increasing purchase price for the second and third years, with half of the option payments being cumulatively applicable to the purchase price.
Mr. Corrado De Gasperis, Executive Chairman and CEO stated, "Our collaboration with Tonogold has expanded from their initial purchase of Lucerne, that we anticipate completing in the near term, to an expansive exploration drilling program targeting some of the highest grade sections of the Comstock Lode. We remain an owner, investor and royalty holder, and we very much look forward to the exploration results over the next few months and well into next year. There is a genuine sense of excitement seeing these rigs mobilized and drilling on the Comstock."