Comstock Mining Receives Expansion Permit
VIRGINIA CITY, NV - Comstock Mining Inc. reported selected unaudited financial results for the quarter ended September 30, 2013. Comstock's Chief Executive Officer, Corrado De Gasperis commented, "Our ramp up and productivity gains have yielded record production for the quarter, including a 39% increase in silver shipments over the prior quarter. The issuance of the expanded Water Control Permit quadruples our permitted capacity and positions us well to double our revenue for next year, significantly reduce our unit costs and, most importantly, generate positive cash flow. We are building an extraordinary business through production and development growth and land expansion, all while running a most responsible Nevada-mining enterprise."
Mining revenue from gold sales for Q3 2013 was $6.6 million, as compared to $6.8 million for Q2 2013. Gold shipments were 5,214 ounces in Q3 2013, a 6% increase as compared to 4,921 ounces in Q2 2013. Silver shipments were 59,731 ounces in Q3 2013, a 39% increase as compared to 42,992 ounces in Q2 2013. Gold and silver shipments both represent record highs for the Company. Initial production ramp-up phase was completed, exceeding initial targeted production rates of 400 gold equivalent ounces per week in Q2 and Q3, and over 500 gold equivalent ounces per week in September. The Company added 16% more ounces of gold to inventory, 6,088 ounces, as compared to 5,265 in Q2 2013, resulting in approximately 12% lower average inventoried cost per ounce at September 30, 2013.
Net loss for Q3 2013 was $4.5 million as compared to $9 million for Q3 2012. The decrease of $4.5 million resulted primarily from a $6.6 million increase in mining revenue, a $4.2 million decrease in all other operating and other expenses, offset by $6.4 million of costs applicable to mining.
Costs applicable to mining were approximately $6.4 million, a $1.8 million decrease from the prior quarter, primarily driven by the elimination of redundant costs associated with temporary use of the state route and longer haul routes and inventory write-downs to realizable market value not occurring in the current quarter.
Operating expenses, excluding costs applicable to mining, totaled $4.9 million for Q3 2013, as compared to $8 million for Q3 2012. The $3.1 million decrease was primarily due to a $2.6 million reduction in exploration and reclamation costs as the Company shifted into full production and a $.5 million reduction to administrative, including compensation, and legal costs.
Received Special Use Permit Modification from Storey County for Heap Leach Pad Expansion and also received Water Pollution Control Permit from State of Nevada NDEP that increases the amount of mineralized material the Company may process from 1 million tons per annum to 4 million tons per annum, enabling the planned production rate to double to 40,000 gold equivalent ounces in 2014.
Comstock also received Lyon County Approval for Reversion of Acreage on the Dayton Mine Property.
The Company has recently transitioned into production in the Lucerne Mine and ramped up to the targeted 20,000 gold-equivalent-ounce annual production rate and exceeded that rate during both the second and third quarters of 2013, averaging over 400 gold-equivalent ounces per week for the quarter ended September 30, 2013, and over 500 ounces per week in September. This intermediate target was exceeded and sustained by maximizing production under existing permitted capacity constraints around the heap leach and processing facility. The Company's existing heap leach is currently being expanded based on the recent receipt of all required permits, including the recently received, key Water Control Permit. This permit increases authorized capacities and processing rates from a previous maximum of 1.0 million tons per annum to 4.0 million tons per annum.
DeGasperis continued: "Nevada continues to represent one of the most supportive mining jurisdictions in the world, with world class regulation and thorough due process. We are pleased with the diligence of NDEP-BMRR's process, prioritizing public safety while supporting the advancement of our business. This is a critical permit modification that enables our production expansion goals for the remainder of this year, next year and beyond. We will move expeditiously to complete our current heap leach expansion from five to eight cells, to increase our rates of production and significantly reduce our unit costs associated with producing our planned 40,000 gold equivalent ounces for next year."
During the second and third quarters of 2013, we completed the ramp up and stabilization activities of the production system, including significant improvements to the metal extraction processes, particularly the Merrill-Crowe facility. We invested approximately $1.4 million for certain productivity enhancing actions associated with pump, pipe, filtration and press capacities, so that the Merrill-Crowe and heap leach facilities could operate at fluid processing rates of up to 1,000 gallons per minute. These capacities are operational and available for the expanded heap leach pad. For the fourth quarter of 2013, we plan on spending up to $2 million in capital expenditures, primarily to expand our heap leaching and related production capacity.
Metal sales for the nine months ended September 30, 2013 totaled $19.8 million, with gold revenues of $17.1 million. We also sold $2.7 million of silver. Metal sales for the three months ended September 30, 2013 totaled $7.9 million, with gold revenues of $6.6 million. We also sold $1.3 million of silver in the third quarter. Silver is accounted for as a by-product credit in costs applicable to mining revenue for financial reporting purposes. For the three months ended September 30, 2013, the Company crushed and stacked over 288,000 dry tons of mineralized material and shipped 5,214 ounces of gold and 59,731 ounces of silver, both record levels for the Company. Gold grades placed onto the pad averaged 0.025 ounces per ton in the third quarter. Material placed on the heap leach pad remains under solution, although not constantly, until the target recovery rates are achieved. The Company aims to continuously improve its operations to enhance grades, maximize yields and increase tons crushed and stacked.
During the third quarter ended September 30, 2013, the Company realized an average price of $1,291.88 price per ounce of gold and a $21.23 average sales price per ounce of silver. At September 30, 2013, the Company has priced approximately 2,400 ounces of gold sales at an average price just over $1,350 per ounce.