Comstock site visit

LODE's solar panel recycling facility is the real deal.

It’s a long weekend, so I’ll be keeping this short.

Long weekend notebook …

• Comstock site visit

• Royalty report

• Guyana

• Interesting links

There’s silver in them panels

I’ve always described Comstock Inc. as a commodities holding company in the process of breaking itself apart.

Bioleum

The pre-revenue sustainable aviation fuel business has been hived off. The goal is an eventual NYSE listing. That was important for me as it means no future cash drain on Comstock. I’ve always valued Bioleum as a call option.

Comstock Mining

Not in production and up for sale. Which makes sense given the return profile and the timeline for the metals business. For the purposes of our stress-tested valuation, this can also be valued as a call option.

Land

The map tells the story. The red dots are just some of the data centres along Interstate 80 and the USA Parkway (439) in the Tahoe Reno Industrial Center. The star is the Silver Springs airport, which isn’t much to look at today but the use cases are obvious given where it’s located.

Comstock owns multiple land packages adjacent to I-80 and the USA Parkway. Those acres are located amongst existing data centres in the TRIC. LODE also owns 100 acres near the airport, which will be used for a future industrial aviation park. The airport land could be sold outright. Or LODE could structure a ground lease transaction where it continues to own the dirt underneath any future buildings that are constructed and maintained by someone else. The numbers start getting stupid when you see what comparable land is selling for and how much of it Comstock has, including LODE’s 17% stake in the nearby Silver Springs Opportunity Fund. That said, it’s raw land. Let’s call the Opportunity Fund a speculative land bank and value the rest of the land at $50-million.

Comstock Metals

That leaves the solar panel recycling business. The purpose of the visit was to understand the following:

• Does Comstock have access to feedstock?

• Will they be able to process at scale?

• Are they so far ahead a well-financed competitor wouldn’t bother trying to build and scale to take market share?

• What is it all worth?

Comstock is currently processing panels at their demonstration plant. The site will eventually house a full-scale recycling plant with the demonstration plant transitioning into a research and development facility.

Currently panels are arriving in northern Nevada from across the country. Their logistics and decommissioning business originated from customers calling them up and asking them to take the solar panels away for them. Tipping fees may eventually disappear but in time the decommissioning business could more than replace that revenue stream.

Solar panels stacked inside and outside Comstock's future full-scale recycling facility

Those panels are eventually broken down into their component parts - dense bags of glass, aluminum and metal fines.

Left: Metal fines, mostly silver. Right: Bags of broken down panels separated into their component parts - aluminum, glass and other metals

Comstock gets paid only on the silver in those bags of metal fines (the aluminum and glass are in separate bags and they get paid on that as well). If that changes, cash payment for the other metals in the fines would drop straight to the bottom line. LODE forecasts each facility can generate $50-million dollars in earnings - or $1 in annual EPS - at a construction cost of $12-million. Last month’s equity offering and the dilution that came with it make sense in the context of moving quickly to outflank the few competitors in the market, all of which appear to be sub-scale with inferior technology. A second facility is on the roadmap.

What’s $1 of EPS worth on a growth business with a proprietary process, a long-term pipeline of feedstock, significant net operating losses and advanced logistics capabilities? Combined with two call options and $1 per share in hard asset value, the right answer is more than $2.50. I’m planning to add to my Comstock position.

Royalty report

Evolve Strategic Element Royalties is going public through a reverse takeover of prospect generator Voyageur Mineral Explorers. The pro-forma business will be a copper-focused royalty company with cornerstone Canadian assets:

• 0.51% net profits interest in Teck Resources’ Highland Valley Copper mine

• 5% NSR copper royalty on Hudbay Minerals’ Copper Mountain mine

• 2.5% NSR royalty on gold and silver produced at Copper Mountain

• 75 cent (CAD) per tonne royalty on Foran Mining’s McIlvenna Bay deposit.

Voyageur intends to wind down its prospect generation business. In a highly competitive market for royalties, I’ll be watching to see if Evolve can source and finance accretive acquisitions on copper assets that matter.

Elsewhere:

Record revenue and gold equivalent ounces for the former Maverix team at Versamet Royalties.

Orogen Royalties 2.0 is alive, well and generating cash after selling its Arthur royalty to Triple Flag.

Vox Royalty spent US$1-million on an iron ore royalty in Western Australia. “The Royalty is a 1.5% Gross Revenue Royalty payable on the first 15 million tonnes of iron ore production from the Wyloo North deposit, which forms part of Fortescue's Greater Western Hub.”

Silver Crown Royalties is raising $5-million through a LIFE offering of shares and warrants. “We have identified a number of cash flowing silver royalties and wanted to have a war chest at the ready in order to move quickly with these projects.”

Guyana situation worth monitoring

A Guyanese patrol boat carrying ballots for today’s elections was attacked from the Venezuelan side. Opposition candidates vying to unseat President Irfaan Ali are pledging to renegotiate Guyana’s 2016 production-sharing contract with Exxon Mobil. Crude production off Guyana's coast is expected to exceed half of OPEC members by 2030.

At the same time, the US has deployed three guided missile destroyers and other ships to Venezuela’s coast and labelled Venezuela’s Nicolás Maduro a narco-terrorist.

Interesting Links

Eric Sprott and Ross Beatty are writing big cheques to Scorpio Gold for a Nevada restart, which is adding mineralization.

Shipping out of Kazakhstan could become a problem.

This is a great graphic by Bloomberg that lays out the situation at the Fed.

US farmers are pulling back on spending.

China burned more coal at power plants between January and July of 2025 than at any time since 2016, despite having renewable capacity.

An oil deal between China and the Taliban? What could possibly go wrong?

Schedule

September 8-11: Beaver Creek Mining Conference.

October 19-21: Planet Microcap Showcase in Toronto

If you’re in any of these areas and want to meet up let me know.