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Item 7. Management’s Discussion and Analysis

2021-03-10 compared with 2020-03-30 · 399 added, 274 removed, 94 unchanged (88% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion provides information that we believe is relevant to understanding and assessing the consolidated results of operations and the financial condition of the Company, as of and for the year ended December 31, 2019 , and our future results.

The information should be read in conjunction with the consolidated financial statements and accompanying notes included in this Form 10-K.

The Company is a Nevada-based, gold and silver mining exploration, development and mining company with extensive, contiguous property in the historic Comstock and Silver City mining districts (collectively, the “Comstock District”) and is an emerging leader in sustainable, responsible mining and is currently commercializing environment-enhancing, precious-metal-based technologies, products, and processes for precious metal recovery.

The Company is a Nevada-based, precious and strategic metal-based exploration, economic resource development, mineral production and metal processing business with a strategic focus on high-value, cash-generating, environmentally friendly, and economically enhancing mining and processing technologies and businesses.

The Company has extensive, contiguous property in the historic Comstock and Silver City mining districts (collectively, the “Comstock District”) and is an emerging leader in sustainable, responsible mining and processing, and is currently commercializing environment-enhancing, metal-based technologies, products, and processes for precious and strategic metals recovery.

The Company’s goal is to grow per-share value by commercializing environment-enhancing, precious and strategic-metal-based products and processes that generate a rate of predictable cash flow (throughput) and increase the long-term enterprise value of our northern Nevada based platform.

The next three years are dedicated to delivering that value by achieving the performance objectives listed below:

Establish and grow the value of our mineral properties:

• Establish the Dayton Resource area’s maiden, stand-alone mineral resource estimate;

• Expand the Dayton-Spring Valley Complex through exploration drilling and geophysical modelling;

• Develop the expanded Dayton-SV Complex toward full economic feasibility, supporting a decision to mine;

• Entitle the Dayton-SV Complex with geotechnical, metallurgical and environmental studies and permitting;

• Validate the Comstock NSR Royalty portfolio (e.g., Lucerne Mine, Occidental Lode, Comstock Lode).

Commercialize a global, ESG-compliant, profitable, mercury remediation system:

• Establish the technical efficacy of MCU’s Comstock Mercury System, and protect the intellectual property;

• Deploy and operate the first international mercury remediation project by deploying MCU’s second and third mercury remediation systems into the Philippines;

• Identify, evaluate and prioritize a pipeline of potential mercury remediation projects;

then deploy the third and fourth mercury remediation projects, producing extended, superior cash flow returns;

• Assess and capitalize on value enhancing, ESG-based expansion opportunities

Monetize non-strategic assets and build a quality organization:

• Monetize our third-party, junior mining securities responsibly, for $12.5 million or more;

• Monetize our non-mining assets for $12.5 million, excluding the Gold Hill Hotel;

• Grow the value of our Opportunity Zone investments to over $30.0 million;

• Deploy a systemic organization, capable of accelerating growth and handling complexity.

The strategic plan is designed to deliver per-share value over the next three years, while positioning the Company for continued growth beyond 2023.

The Company began acquiring properties in the Comstock District in 2003.

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The Company continues evaluating and acquiring properties inside and outside the district, expanding its footprint and evaluating all our existing and prospective opportunities for further exploration, development and mining.

The Company’s goal is to grow per-share value by commercializing environment-enhancing, precious-metal-based products and processes that generate a rate of predictable cash flow (throughput) and increase the long-term enterprise value of our northern Nevada based platform.

The Company and its subsidiaries now own or control approximately 9,358 acres of mining claims and parcels in the broader Comstock District and surrounding area.

The acreage includes approximately 2,396 acres of patented claims and surface parcels (private lands) and approximately 6,962 acres of unpatented mining claims (public lands), which the Bureau of Land Management (“BLM”) administers.

The Company and its subsidiaries now own or control approximately 9,358 acres of mining claims, parcels, and royalty interests in the broader Comstock District and surrounding area.

The acreage includes approximately 2,396 acres of patented claims and surface parcels (private lands), and approximately 6,962 acres of unpatented mining claims (public lands), which the BLM administers.

The Company's headquarters is on American Flat Road, immediately north of the Lucerne resource area and just south of Virginia City, Nevada.

Because of the Comstock District’s historical significance, the geology is well known and has been extensively studied by the Company, our advisors and many independent researchers.

We have expanded our understanding of the geology through vigorous surface mapping and drill hole logging.

We have expanded our understanding of the geology through

vigorous surface mapping and drill hole logging.

The volume of geologic data is immense, particularly in the Lucerne and Dayton resource areas.

We have amassed a large library of historic data and detailed surface mapping of Comstock District properties and continue to obtain historic information from private and public sources.

We integrate this data with information obtained from our recent mining operations, to target geological prospective exploration areas and plan exploratory drilling programs, including expanded surface and underground drilling.

The Company continues evaluating and acquiring properties, expanding its footprint and evaluating all our existing and prospective opportunities for further exploration, development and mining.

The near-term goal of our business plan is to maximize intrinsic stockholder value realized, per share, by continuing to acquire and develop mineralized and potentially mineralized properties, exploring, developing and validating qualified resources (measured, indicated and inferred) and reserves (proven and probable) that enable the commercial development of our properties through extended, long-lived mine and mercury remediation plans that are economically feasible and socially responsible, including mine plan development for both the Dayton and Lucerne resource areas, with both surface and underground development opportunities.

We have amassed a large library of historical data and detailed surface mapping of Comstock District properties and continue to obtain historical information from public and private sources.

We integrate this data with information obtained from our recent mining operations, to target prospective geological exploration areas and plan exploratory drilling programs, including expanded surface and underground drilling.

Our Dayton resource area and the adjacent Spring Valley exploration targets are located in Lyon County, Nevada, approximately six miles south of Virginia City.

Access to the properties is by State Routes 341 and 342, both paved roads.

Our Lucerne resource area is located in Storey County, Nevada, approximately three miles south of Virginia City and 30 miles southeast of Reno.

Our sale to Tonogold of the membership interests in Comstock LLC, the owner of the Lucerne Mine, resource area and related permits closed on September 8, 2020.

The Lucerne resource area is located in Storey County, Nevada, approximately three miles south of Virginia City and 30 miles southeast of Reno.

The Lucerne resource area was host to the Company’s most-recent test mining operations from 2012 through 2015.

The heap processing facility is in American Flat, approximately three quarters of a mile west of the Lucerne mine.

Lucerne is the subject of ongoing assessment, exploration and development plans by Tonogold.

The Company retains a 1.5% NSR royalty in the Lucerne properties.

The Company achieved initial production and first poured gold and silver on September 29, 2012.

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Current Projects

District-wide Exploration

The Company has identified many exploration targets on its land holdings in the Comstock District, but has focused, to date, on the Dayton resource area and, through our collaboration with Tonogold Resources Inc.

(“Tonogold”) the Lucerne resource area (including surface and underground exploration).

We have also leased the remaining Storey County mineral claims, including the Occidental group and the Gold Hill group of exploration targets, to Tonogold, who has near-term plans for exploration and ultimately development towards the economic feasibility of those assets.

We are developing exploration plans for the remaining areas, primarily the Spring Valley group that we consider an extension of the Dayton resource area.

The Company's district-wide exploration and development plans contemplate three specific, geological areas that the Company has reorganized into new wholly owned subsidiaries called Comstock Exploration and Development LLC, Comstock Northern Exploration LLC and Comstock Mining LLC.

Exploration and Development

We have also leased the remaining Storey County mineral claims, including the Occidental group and other exploration targets, to Tonogold, which has near-term plans for exploration and ultimately development towards economic feasibility for those assets.

We are developing exploration plans for the remaining areas, primarily the Dayton resource area and Spring Valley group that we view as an extension of the Dayton resource area.

The Company's district-wide exploration and development plans contemplate three specific, geological areas that the Company has organized into wholly-owned subsidiaries called Comstock Exploration and Development LLC, Comstock Northern Exploration LLC, and Comstock LLC.

Comstock Exploration and Development LLC includes the Dayton and Spring Valley areas.

Comstock Northern Exploration LLC includes the Occidental and Gold Hill exploration targets now leased to Tonogold, and Comstock Mining LLC includes the Lucerne properties, that Tonogold has agreed to acquire.

These exploration targets represent over 7 miles of mineralized strike length, with current and historical grades of gold and silver, and significant historical mine production.

Refer to Figure 4.

The Company retained royalties ranging from 1.5% to 3.0% on the Lucerne, Occidental and Gold Hill properties.

Comstock Northern Exploration LLC includes the Occidental and Gold Hill exploration targets now leased to Tonogold, and Comstock LLC.

Comstock LLC, which was recently acquired by Tonogold, includes the Lucerne properties, for which the Company retains a 1.5% NSR royalty.

These exploration targets represent over 7 miles of mineralized strike length, with current and historical grades of gold and silver, and significant historical mine production (Figure 4).

The Company retained royalties ranging from 1.5% to 3.0% on the Lucerne, Occidental and other properties, and an additional royalty of 1.0% (that is 25% of 4%) on Sutro Tunnel Company mining patents in Storey County, Nevada, through the Company's 25% membership interest in Pelen Limited Liability Company ("Pelen"), the 100% owner of the historic Sutro Tunnel Company.

Figure 4 - General Overview of Priority Exploration Targets

Comstock Mining LLC (100% owner of the Lucerne Resource Area)

Our Lucerne resource area is located in Storey County, Nevada, approximately three miles south of Virginia City and 30 miles southeast of Reno, and has been the primary focus of the Company’s exploration and development efforts since 2003.

Lucerne includes the previously mined Billie the Kid, Hartford and Lucerne mining patents, and extends east and northeasterly to the area of the historic Woodville (southern-most of the historic Comstock bonanzas), Succor and Lager Beer patents and north to the historic Justice and Keystone mines.

The Lucerne resource area is approximately one mile along strike, with explored widths from 600 to 1,800 feet, representing approximately 845 acres of the land holdings controlled by the Company.

The Lucerne is the site of our previous mining activities and ongoing exploration and development by Tonogold, the company that has agreed to acquire Comstock Mining LLC.

The Company holds the key mining permits required to resume surface or underground mining in this area.

The Company’s prior exploration activities in the Lucerne area included open pit gold and silver test mining from 2004 through 2006, and from late 2012 through 2015.

As defined by the Securities Exchange Commission (“SEC”) Industry Guide 7 and by the 2018 amendments to Regulation S-K, the Company has not yet established any proven or probable reserves at the Lucerne mine.

From 2012 to 2016, the Company processed approximately 2.6 million tons of mineralized material, producing 59,515 ounces of gold and 735,252 ounces of silver.

In December, 2018, the Company received unanimous approval from the Storey County Board of Commissioners to extend its landmark Special Use Permit (“SUP”) for mining and processing for the Lucerne Mine Project for the maximum allowable, 20-year term, extending the original, 10-year permit until September 2, 2034.

The permit applies to both surface and underground mining, processing, milling, exploration and development, and other ancillary uses and represents one of the most significant, progressive and collaborative permit approvals in the Company’s history, and its extension strengthens the foundation for the future growth of the Company and its Lucerne-partner, Tonogold.

On January 24, 2019, the Company entered into a Purchase Agreement to sell its interests in CML, a wholly-owned subsidiary of Comstock whose sole assets are the Lucerne properties and related permits, to Tonogold.

The Purchase Agreement requires a total purchase price and fees of $ 17.6 million, comprised of $11.5 million in cash and $6.1 million in Tonogold CPS.

Tonogold will also guarantee the Company’s remaining financial responsibility for its membership interest in Northern Comstock LLC, which owns and leases certain mineral properties in the Lucerne area, and also assume certain reclamation liabilities, both totaling approximately $7.0 million.

The Company also retains a 1.5% NSR royalty on the Lucerne properties.

At closing on November 18, 2019, Tonogold received 50% of the membership interests of CML, representing the ownership contractually granted based on the cash and CPS consideration paid to date.

Tonogold will receive the remaining 50% of the membership interests after it has delivered the remaining cash consideration.

The Company will retain all management control and authority over CML until Tonogold has made all cash payments in full.

Accordingly, Tonogold’s membership interest in CML is accounted for as a noncontrolling interest shown in the consolidated balance sheets.

Over the past two years, Tonogold, aided by the independent mining advisory firm of Mine Development Associates (“MDA”), has evaluated and remodeled the Lucerne resource estimate, and plans further exploration, development and economic feasibility assessments.

Comstock Processing LLC (100% owner of the American Flat Processing Facility)

The processing facility is in the American Flat area of Gold Hill, NV, less than a mile west of Lucerne, and operated 24 hours per day, seven days per week, for substantially all of 2013 through 2016.

During 2019, Comstock formed Comstock Processing LLC ("CPL"), a newly realigned, wholly-owned subsidiary that owns all of the property, plant, equipment and permits for the crushing, agglomerating, leaching, Merrill Crowe processing, mercury retort, refining, and metallurgical operations located at 1200 American Flat, Virginia City, NV.

The processing facility is in the American Flat area of Gold Hill, Nevada, less than a mile west of Lucerne, and operated 24 hours per day, seven days per week, for substantially all of late 2012 through 2016.

During 2019, Comstock formed Comstock Processing LLC ("CPL"), a newly realigned, wholly-owned subsidiary that owns all of the property, plant, equipment, and permits for the crushing, agglomerating, leaching, Merrill Crowe processing, mercury retort, refining, and

metallurgical operations located at 1200 American Flat Road, Virginia City, Nevada.

The facilities represent a fully permitted platform, best positioned for implementing our Strategic Focus on high-value, cash-generating, precious metal-based activities, including, but not limited to, metals exploration, engineering, resource development, economic feasibility assessments, mineral production, metal processing and related ventures of environmentally friendly, and economically enhancing mining technologies.

To date, Comstock Processing has entered into two agreements that leverage its platform for nearer-term cash generation:

first with Tonogold for the Lease-Option Agreement to lease and operate the facilities and second, with Mercury Clean Up LLC (“MCU”) for the commercial pilot of the MCU mercury remediation system.

first, with the Lease Option Agreement with Tonogold to lease and operate the facilities and second, with Mercury Clean Up LLC (“MCU”) for the commercial pilot of the MCU mercury remediation system.

CPL’s Lease Option with Tonogold

The Lease Option Agreement (the "Lease-Option"), between the Company and Tonogold, represents an option to lease the permitted American Flat mining property, plant and equipment to Tonogold for crushing, leaching and processing material from the Lucerne mine.

Under the Lease-Option, Tonogold has already commenced reimbursing the Company approximately $1.1 million per year to reimburse the costs of maintaining the facility.

If the option is exercised, Tonogold would then pay the Company a rental fee of $1 million per year plus $1 per processed ton, in addition to all the costs of operating and maintaining the facility.

After the first $15 million in rental fees are paid, the rental fee would step down to $1 million per year and $0.50 per processed ton for the next $10 million paid to the Company.

On November 18, 2019, the Company entered into the Lease Option Agreement to lease its permitted American Flat mining property, plant and equipment to Tonogold for crushing, leaching and processing material from the Lucerne Mine.

Under the Lease Option Agreement, Tonogold is required to reimburse the Company approximately $1.1 million in expenses to maintain the option.

If the option is exercised, Tonogold will then pay the Company a rental fee of $1.0 million per year plus $1 per processed ton, in addition to all the costs of operating and maintaining the facility.

After the first $15.0 million in rental fees are paid, the rental fee will step down to $1.0 million per year and $0.50 per processed ton for the next $10.0 million paid to the Company.

CPL’s Venture with Mercury Clean Up, LLC

The second agreement is with MCU, to pilot test new, cleaner technologies, in collaboration with Oro Industries Inc.

The second agreement (the "MCU Agreement") is with Mercury Clean Up, LLC ("MCU"), to pilot test new, cleaner technologies, in collaboration with Oro Industries Inc.

(“Oro”), for the manufacture and global deployment of mercury remediation systems with proprietary mechanical, hydro, electro-chemical and oxidation processes to reclaim and remediate mercury from soils, waste and tailings.

MCU has the exclusive, world-wide rights to four patentable technologies and equipment that we believe will demonstrate feasible, economic mercury remediation.

MCU has the exclusive, worldwide rights to four patentable technologies and equipment that we believe will demonstrate feasible, economic mercury remediation.

Comstock provides the platform for testing the mercury remediation system and MCU will conduct the trials that prove scalable feasibility.

MCU plans to deploy the solution globally and is working on at least one major, international remediation project.

Comstock’s award-winning mercury reclamation experience coupled with MCU’s technology and processing know-how positions a new growth opportunity consistent with the Company’s Strategic Focus.

MCU plans to deploy the solution globally and has secured its first major, international remediation project in the Philippines.

Comstock’s award-winning mercury reclamation experience coupled with MCU’s technology and processing know-how positions a new, global growth opportunity consistent with the Company’s Strategic Focus.

Worldwide unregulated activity has released thousands of tons of mercury into the environment.

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Pursuant to the MCU Agreement, the Company committed $2.0 million of capital contributions payable in cash of $1.15 million and stock of $0.85 million, in exchange for 15% of the fully-diluted equity ownership of MCU and 50% of the equity of any future joint ventures formed with MCU.

Through December 31, 2019, the Company has invested $0.75 million in cash and $0.75 million in stock out of the $2 million commitment for MCU to demonstrate the feasibility of the Mercury Remediation System on CPL’s permitted platform.

Upon successful feasibility, the Company and MCU would create a new, 50-50 venture called Comstock Mercury Remediation LLC for pursuing global business opportunities.

The Company has the rights to invest in up to 25% of MCU and separately, 50% of the joint venture and expects to close on these transactions during the second and third quarters of 2020.

Over the past seven years, Comstock has implemented several approved plans, by the Nevada Division of Environmental Protection (“NDEP”), intended to address NDEP’s and the U.S.

Environmental Protection Agency (“EPA”) protocols, guidance and goals for sampling, characterizing, transporting and managing mercury within the Carson River Mercury Superfund Site.

These plans and CPL’s existing, permitted infrastructure provide an ideal platform for evaluating the efficacy of the MCU process.

Through December 31, 2020, the Company has invested $1.15 million in cash and over $0.85 million in stock, representing a $2.0 million commitment for MCU to demonstrate the feasibility of the Mercury Remediation System on CPL’s permitted platform.

Over the past seven years, Comstock has implemented several plans, approved by NDEP, intended to address NDEP’s and the U.S.

Environmental Protection Agency (“EPA”) protocols, guidance and goals for sampling, characterizing, transporting and managing mercury within the Carson River Mercury Superfund Site ("CRMS") Study Area.

These plans and CPL’s existing, permitted infrastructure provide an ideal platform for validating the efficacy of the MCU process.

MCU and the Company will work closely with NDEP for any additional approvals or permits.

MCU has delivered sampling and testing equipment to the American Flat site in February 2020, and has begun taking samples of tailings at locations in the Carson River Mercury Superfund Site ("CRMSS") to locate suitable material to commence bulk testing.

The remaining equipment is scheduled for arrival in April 2020.

The Company and MCU are evaluating numerous locations containing historical, mercury-contaminated tailings, and developing a detailed schedule for pilot testing.

MCU delivered sampling and testing equipment to the American Flat site in February 2020, and began taking samples of tailings at locations in the CRMS to locate suitable material to commence testing.

The remaining equipment arrived at the American Flat site during the third quarter of 2020, and MCU began stockpiling material and initial test processing during the fourth quarter of 2020.

Based on successful proof of technical and economic viability, the Company and MCU would create a new, 50-50 venture called Comstock Mercury Remediation LLC for pursuing global business opportunities.

The Company currently holds 15% of the membership interests of MCU with an option to increase to 25% of the membership interests, and separately, the

right to 50% participation in any joint ventures, including, but not limited to, MCU Philippines, Inc.

and Comstock mercury remediation project, the first two mercury remediation project opportunities.

The Company entered into a second amendment of the MCU Agreement, on April 10, 2020, wherein, MCU and Comstock have identified an opportunity to remediate mercury in the Philippines, particularly in the province of Davao d' Oro (the “Philippine Opportunity”);

where Comstock and MCU formed a new joint venture to engage profitably in the Philippine Opportunity.

The Company has made cash investments in the form of $1.2 million in interest free loans and committed up to an additional $1.8 million in equity and debt investments, and received 50% ownership of a new entity called MCU Philippines, Inc.

At such time as Company investments in joint ventures under the MCU Agreement total $2.0 million, it will be issued an additional 10% of the membership interests of MCU, for total membership interests of 25%.

The first processing unit was shipped to the Philippines in the fourth quarter of 2020, with production expected to commence during the first quarter of 2021.

CPL and Development of Clean Technologies

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A breakthrough with cleaner technologies could result in higher, faster recoveries with reduced waste, shorter permitting cycle times and lower reclamation costs.

The Company continues exploring other partners and ventures that can leverage this fully-permitted platform for the development of cash-generating, precious metal-based activities, including, but not limited to, metals exploration, engineering, resource development, economic feasibility assessments, mineral production, metal processing and related ventures of environmentally-friendly, and economically enhancing mining technologies.

The Company continues exploring other partners and ventures that can leverage its fully-permitted platform for the development of cash-generating, precious metal-based activities, including, but not limited to, metals exploration, engineering, resource development, economic feasibility assessments, mineral production, metal processing, and related ventures of environmentally-friendly and economically enhancing mining technologies.

Comstock Exploration & Development (100% owner of the Dayton Resource and Spring Valley Exploration Areas)

Our Dayton resource area and the adjacent Spring Valley exploration targets are located in Lyon County, Nevada, approximately six miles south of Virginia City.

Access to the properties is by State Routes 341 and 342, both paved roads.

The Dayton resource area includes the historic Dayton, Kossuth and Alhambra patents, and the Dayton Consolidated mine workings.

The historic Dayton Consolidated mine was the last meaningful underground mining operation in the Comstock District, before being closed after the War Act in October 1942, which closed down non-essential gold mining operations in the United States and its territories.

The Dayton resource area ranks as the Company’s top exploration and development target.

In January 2014, the Lyon County Board of Commissioners approved strategic master plan and zoning changes on the Dayton, Kossuth and Alhambra mining patents and other properties located in the Dayton resource area, enabling a more practical, comprehensive feasibility study for mining.

Geological studies and development planning are currently underway utilizing data from extensive metallurgical testing and assessment during 2017, an additional 30,818 feet of drilling completed in 2015, geophysical analysis and interpretation completed in 2013, and extensive geological data from pre-2013 drill programs.

During the third quarter of 2020, the Company engaged Geotech Ltd ("Geotech") of Aurora, Canada, to conduct an airborne geophysical survey of the Dayton resource area, Spring Valley exploration targets, and the rest of the Company's Comstock District properties.

The survey included both magnetic and Geotech's proprietary Versatile Time-Domain Electromagnetic ("VTEM") surveys.

The survey was flown from September 19 through October 3, 2020, with 1,161 line-kilometers.

The interpreted, three-dimensional results are scheduled to be delivered in early 2021.

The results will greatly increase the Company’s understanding of the Dayton resource area and Spring Valley resource expansion potential, along with the Company’s other exploration targets in Lyon County.

Figure 5 - Total Magnetic Intensity, with cooler colors representing relative magnetic lows, and warmer colors relative highs

The Company’s technical staff is currently compiling a detailed structural interpretation of the Dayton resource area, which will provide the framework for a completely new resource model.

The detailed interpretation is leading to a list of highly prospective drill targets to further define and expand the mineral resource.

Figure 6 - Example Interpreted Dayton Section, West to East

The plan includes expanding the current resource at the Dayton resource area and continuing southerly into Spring Valley.

The Spring Valley group of exploration targets lies adjacent to the Dayton resource area, trending south toward the southern-most end of the Comstock District that includes the southern portion of the Kossuth patented claim and the Dondero and Daney claims, and all of the Company’s placer mining claims in Spring Valley and Gold Canyon.

The Spring Valley mineralized structures lie mostly concealed beneath a veneer of sediment gravels and the volcanic host rocks and the structural controls of the mineralization defined for the Dayton resource area are known to continue south into Spring Valley.

The exploration of Spring Valley will include phased drilling programs that will continue southerly from State Route 341 to the historic Daney mine site (Figure 4), with a potential strike length of approximately 9,600 feet.

On May 21, 2020, the Company enhanced its land position in Spring Valley by exercising its option with New Daney Company Inc.

("New Daney") to purchase seven unpatented lode mining claims in Spring Valley.

These claims had been leased from New Daney since 2010.

The Company paid a total of $100,000 for the claims.

On October 8, 2020, the Company closed the transaction with a payment in full for the $85,000 balance.

The Company is proceeding to publish a separate, S-K 1300 compliant, Initial Assessment technical report for the Dayton resource area to validate a mineral resource estimate.

The new technical report will provide not only a new resource estimate, but also a phased drilling plan for further defining and expanding the resource for sustainable, profitable mining.

The Company plans to continually advance the Dayton resource area to full feasibility, towards a production ready mine plan.

Mining and processing on lands 100% privately held by the Company should simplify and shorten the critical permitting chain.

Comstock Northern Exploration LLC (Occidental Lode and Other Northern Target Mineral Claims)

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Accordingly, the Company signed a new Mineral Exploration and Mining Lease (the "Exploration Lease") with Tonogold for certain mineral properties in Storey County, Nevada.

The lease is for an initial term of 5 years, with options to renew for an additional 15 years, so long as specific commitments are met, including spending at least $1 million per year on exploration and progressively validating technical reports.

The lease is for an initial term of 5 years, with options to renew for an additional 15 years, so long as specific commitments are met, including spending of at least $1.0 million per year on exploration and progressively validating progress through technical reports.

The lease has a quarterly fee of $10,000 in the first year, escalating 10% per year thereafter.

Tonogold is also required to reimburse all claim maintenance costs and other costs associated with owning the properties.

Tonogold is also required to reimburse all claim maintenance costs, third-party lease payments, and other costs associated with owning the properties.

The Company retains a 1.5% to 3.0% NSR royalty on future mineral production from the properties.

The mineral lease includes the Occidental group and Gold Hill group of exploration targets, which contains many historic mining operations, including the Overman, Con Imperial, and Yellow Jacket mines.

The Company also maintains an additional net royalty of 1.0% (that is, 25% of 4%) on Sutro Tunnel Company mining patents in Storey County, Nevada, through the company’s 25% membership interest in Pelen, the 100% owner of the historic Sutro Tunnel Company.

The Exploration Lease includes the Occidental group and Gold Hill group of exploration targets, which contain many historic mining operations, including the Overman, Con Imperial, and Yellow Jacket mines, as well as the historically under-developed Occidental Lode, parallel to the main Comstock trend.

The Company believes this will accelerate the development of these targets and enhance the value of its mineral property and royalty portfolio.

Tonogold is current permitting an exploration drilling program for these areas, and expects to begin drilling in the second quarter of 2020.

Comstock Exploration & Development (100% owner of the Dayton Resource and Spring Valley Exploration Areas)

The Company plans to advance the Dayton to full feasibility, towards a production ready mine plan.

The plan includes expanding the current resource at the Dayton and continuing southerly into Spring Valley, with incremental expansion programs that include exploration and definition drilling of targets identified by the prior conventional percussion, RC and diamond core drill programs and magnetic, IP and resistivity geophysical surveys (see Figure 5).

The Company previously estimated a mineral resource for Dayton as part of a broader technical report for the Comstock Mine Project.

Since our last Dayton resource estimate, the Company has:

Increased the Dayton project property position, both mining claims and private land, including more than 350 acres of contiguous private lands suitable for a dedicated mineral processing site;

Achieved a landmark, Lyon County Master Plan and zoning change that broadened the potential land uses and restored mining as an appropriate use for the historic mining patents;

Restored several historic Dayton mine portals for safe exploration of the accessible mine workings;

Completed underground geologic mapping of the accessible mine workings and completed underground sampling;

Identified new, broader mineralized zones and structures;

Drilled 408 shallow holes totaling 30,819 feet, identifying new mineralized structures covered by shallow alluvium;

Mapped a recently uncovered, high-grade shear zone in the Dayton adit.

Systematic channel sampling revealed a 90.8 foot mineralized shear zone, starting 245 feet inside the adit.

The results for the entire 90.8 feet averaged 0.043 opt gold and 0.404 opt silver.

The zone included 7.5 feet averaging 0.121 opt gold and 0.753 opt silver.

Multi-element assays confirmed the presence of previously-identified, elevated values for additional elements such as Cadmium, Selenium, and Tungsten.

Improved, meaningfully, the geologic mapping of the area;

Expanded trials by Cycladex, a strategic investee, testing their patented, cycladextrin lixiviant, a potential alternative to cyanide heap leaching for our Dayton materials;

Commenced trials with Itronics, Inc., using their KAM-Thio metallurgical recovery processes, another potential alternative to cyanide heap leaching for our Dayton materials.

The new information is supporting the development of a completely updated, detailed, three-dimensional model of the Dayton project.

The Company’s technical staff is currently compiling a detailed structural interpretation of the Dayton resource area, which will provide the framework for the new resource model.

The detailed interpretation is leading to a list of highly prospective drill targets to further define and expand the mineral resource.

Figure 5 - Dayton and Spring Valley Magnetic Geophysics with Interpreted Veins and Structures

In-house Dayton engineering and mine planning efforts have resulted in profiling various economic shells with multiple cutoff grade scenarios.

Various layouts for the mine and corresponding processing facilities have been conceptually developed and located on lands 100% privately held by the Company, thus simplifying and shortening the critical permitting chain.

The Company has retained the independent mining advisory firm of Behre Dolbear to produce a new, standalone National Instrument 43-101 (“NI 43-101”) compliant technical report for the Dayton resource area that supports the subsequent scope of publishing a Preliminary Economic Assessment (“PEA”) for the Dayton.

The new technical report will provide a new resource estimate, and a phased drilling plan for better defining and expanding the resource for sustainable, profitable mining.

Dayton Metallurgy

The Dayton mineralized material has been subjected to metallurgical testing by independent laboratories and in the Company’s on-site lab.

Column tests were conducted by McClelland Laboratories in 2011 on medium-grade and high-grade composites from the Dayton area, at both 1” and ½” crush sizes.

The gold recovery after 154 days averaged 86.7% for gold and 47.4% for silver.

The final report stated that at the end of the test, the curves had flattened, but recovery was still increasing.

In early 2018, the Company’s in-house lab ran column tests on bulk samples from three different locations in the Dayton resource area:

Glory Hole mid-grade, Glory Hole high-grade, and the Dayton Adit.

Two columns were loaded from each bulk sample.

The recovery after 74 days averaged 84% for gold and 55% for silver.

The metal recovery had not stopped after 74 days, but the daily incremental increases were below the Company’s analytical detection limits.

The Company is working with strategic partners to test alternative, greener technologies for processing the mineralized material from the Dayton resource area.

This includes trials by Cycladex, Inc., a strategic investee, funded, in part, by the National Science Foundation, for extensive testing of their patented, cycladextrin lixiviant, and Itronics, Inc.

to test their KAM-Thio metallurgical recovery process on the Dayton mineralized material.

Both partners represent potential alternatives to traditional cyanide heap leaching.

The ongoing testing of alternative technologies underpins the Company’s commitment to responsible development of the Dayton resource.

A breakthrough with any of these cleaner technologies could result in higher, faster recoveries with reduced waste, as well as a streamlined permitting process and lower long-term reclamation costs.

Dayton - Spring Valley Group Targets

Spring Valley lies adjacent to the south of the Dayton resource area, extending to the south and east of State Route 341, trending south toward the southern-most end of the Comstock District that includes the southern portion of the Kossuth patented claim and the Dondero, Daney and New Daney claims and all of the Company’s placer mining claims in Spring Valley and Gold Canyon.

Potentially economic gold mineralization has been intercepted in several widely spaced holes drilled during prior Spring Valley drilling programs.

The Spring Valley exploration program is designed to target areas that have similar magnetic signatures of known economic grade mineralization.

The magnetic geophysical survey was further studied and a structural interpretation was developed that illustrated multiple cross cutting structures (colored green) that are oblique to the southerly projected north/south vein trend (colored red), refer to Figure 5.

Though rare due to alluvial cover, the outcropping quartz veins and outcropping crosscutting structures had definitive diagnostic magnetic signatures.

The interpretation of the vein structures were derived by connecting specific magnetic attributes as identified on each 25-meter spaced survey lines.

Similar structures have been identified in the Dayton area and were important components for the development of economic grades of mineralization.

The exploration of Spring Valley will include phased drilling programs that will continue southerly from SR 341 to the historic Daney mine site (Figure 6), with a potential strike length of approximately 9,600 feet.

Figure 6 - Dayton and Spring Valley Group Targets

The technical staff reviewed historic geologic and geophysical studies and prior drill programs that focused upon the Dayton resource area and extensions south into Spring Valley.

The few drill holes that were completed in Spring Valley intercepted altered Miocene volcanic rock known to host the economic mineralization of the Dayton.

Specific drill holes that encountered highly mineralized zones are highlighted on Figure 5.

Collectively, several specific locations were selected and are targeted for future drilling.

The Dayton has open ended economic mineralization requiring additional drill holes to delineate the geometry for mine planning.

South of the Dayton, the limited drilling coupled with the geophysical interpretation indicates the targeted exploration model extends an additional 8,000 feet (length of geophysical magnetic survey) into Spring Valley.

Ground magnetic geophysical surveys identified a linear anomalous corridor, defined by a series of relative magnetic lows.

Altered volcanic host rocks have been intercepted by limited drilling and identified several mineralized zones.

Selected drill hole intercepts are highlighted (see Figure 5).

The mid-level magnetic lows define a zone (up to 500 feet wide) beginning at the Dayton and continuing southerly approximately 8,000 feet (length of geophysical magnetic survey) towards the Daney patent.

The zone is further defined by the trace of interpreted north/south trending vein swarms depicted on Figure 5.

In the Dayton the increased density of the vein swarms with intersecting cross structures has been indicative to host the higher grades and larger volumes of economic mineralization.

This scenario has generated a multiple drill target environment.

The Spring Valley exploration program is designed to target areas that have similar magnetic signatures of known economic grade mineralization.

The magnetic geophysical survey was further studied, and a structural interpretation was developed that illustrated multiple cross cutting structures (colored green) that are oblique to the southerly projected north/south vein trend (colored red), refer to Figure 5.

Though rare due to alluvial cover, the outcropping quartz veins and outcropping crosscutting structures had definitive diagnostic magnetic signatures.

The interpretation of the structures and veins were derived by connecting these specific magnetic attributes as identified on each 25-meter spaced survey line.

Similar structures have been identified in the Dayton and are important components for the development of economic mineralization.

Pelen-Sutro Tunnel Company Acquisition

In January of 2018, the Company issued 295,082 shares of restricted common stock as initial payment to acquire 25% of the total membership interests of Pelen, LLC.

Pelen LLC is the 100% owner of the historic Sutro Tunnel Company that owns the Town of Sutro, the historic 6-mile Sutro Tunnel, the federal land grants and mining rights spanning 1,000 feet on each side of the 6-mile span, the rights to the tunnel’s water and the patented mining claims and private lands on Gold Hill.

The Company issued 351,637 additional shares in November, 2018, and set the closing of the purchase of the membership interests by December 31, 2019, once the seller of the membership interests has received total cash proceeds of at least $585,000 either through sale of the restricted common stock received or through additional cash payments made by the Company.

If all of the shares of restricted common stock have been sold by the seller of the membership interests and the aggregate proceeds received are less than $585,000, then the Company is required to pay the shortfall in either additional shares of the Company’s common stock or cash, at the Company’s election.

In December 2019, the agreement was amended to revise the “Cut-Off” date to March 31, 2020, for closing the transaction.

The Company paid $11,700 of interest payable as of December 31, 2019 .

The Company also agreed to prepay $5,850 of interest payable with respect to the period between December 31, 2019, and March 31, 2020.

Non-mining Real Estate

On September 26, 2019, the Company entered into new agreements, with Sierra Springs Enterprises Inc., a qualified opportunity zone business, to sell the industrial land and senior water rights in Silver Springs, NV, (the “98 acres”) for $6.5 million and to sell its rights in the membership interests in Downtown Silver Springs, LLC (“DTSS”) for $3.6 million.

The agreements anticipate the transactions to close in the first quarter of 2020.

On September 15, 2019, and effective September 25, 2019, the Company terminated prior agreements to sell the 98 acres and DTSS to another third party.

The Gold Hill Hotel is listed for sale for $1.0 million.

The Gold Hill Hotel has been consistently profitable and cash positive over the past two years.

The Daney Ranch is listed for sale, in two components, for a total of $3.8 million.

Since December 31, 2019, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19,” has resulted in governments worldwide enacting emergency measures to combat the spread of the virus.

These measures, including the implementation of travel bans, quarantine periods and social distancing, have caused material disruptions to global business and an economic downturn.

Global equity markets have experienced significant volatility and weakness.

Tonogold has permitted an exploration drilling program for these areas, and began drilling during the third quarter of 2020, commencing their announced $7.0 million drill program, including both core and RC drilling, focused on the historically significant Comstock Lode.

Comstock Mining LLC (100% owner of the Lucerne Resource Area)

In January 2019, the Company and Tonogold entered into a Purchase Agreement, as restated and amended in September 2020, to sell to Tonogold its interests in Comstock LLC, a wholly-owned subsidiary of the Company with sole net assets of the Lucerne properties and related permits.

The transaction was completed September 8, 2020, with Tonogold receiving 100% of the membership interests and full control of Comstock LLC.

The Company received consideration including $7.1 million in cash, $6.1 million in CPS with a fair value of $7.6 million, and a Note with fair value of $6.1 million, net of a related contingent forward with a fair value of $2.0 million, for a total of $18.8 million, resulting in an $18.3 million gain.

Tonogold also guaranteed the Company’s remaining payments for its membership interest in Northern Comstock LLC, which owns and leases certain mineral properties in the Lucerne area, and assumed certain reclamation liabilities.

The Company also retains a 1.5% NSR royalty on the Lucerne properties.

See Note 2, Significant Transactions, to the consolidated financial statements.

Over the past two years, Tonogold, aided by the independent mining advisory firm of Mine Development Associates, has evaluated and remodeled the Lucerne mineral resource, and plans further exploration, development and economic feasibility assessments.

Figure 7 - Dayton and Spring Valley Ground-Magnetic Geophysics with Interpreted Veins and Structures

Significant Transactions

Tonogold Resources Inc.

Securities, Purchase, Lease and Option Agreements

There are three agreements between the Company and Tonogold Resources Inc ("Tonogold"):

the Membership Interest Purchase Agreement, the Mineral Exploration and Mining Lease, and a Lease Option Agreement for the Company's American Flat processing facility.

See Note 2, Significant Transactions, to the consolidated financial statements.

Membership Interest Purchase Agreement

On January 24, 2019, the Company entered into an agreement, as amended and restated on September 8, 2020, to sell to Tonogold its interests in Comstock LLC, a wholly-owned subsidiary with sole net assets of the Lucerne properties and related permits, (the "Purchase Agreement”), with the initial closing on November 18, 2019.

On November 18, 2019, Tonogold received 50% of the membership interests of Comstock LLC, in exchange for the consideration paid to date.

The Company retained all management control and authority over Comstock LLC until Tonogold's membership interests totaled 100%.

On September 8, 2020, the Purchase Agreement was closed, and 100% of the membership interests were acquired by Tonogold.

The fair value of the consideration delivered by Tonogold for the membership interests in Comstock LLC was $18.8 million, including cash, CPS, and a note receivable.

The Company's gain on the sale was $18.3 million, recorded during the year ended December 31, 2020 in the consolidated statements of operations.

Other features of the Purchase Agreement include Tonogold guaranteeing the Company’s future payments of capital contributions required under the operating agreement of Northern Comstock LLC, which owns and leases certain mineral properties in the Lucerne area, the assumption of certain reclamation liabilities, and the reimbursement of certain operating costs.

The Company also retains a 1.5% NSR royalty on the Lucerne properties.

Cash - Through September 8, 2020, the Company received $7.1 million in a series of cash payments from Tonogold, starting with a $1.0 million non-refundable deposit in January 2019, and concluding with $140,000 at closing of the Purchase Agreement.

Tonogold CPS and Common Shares - The consideration received under the Purchase Agreement included the CPS.

During 2019, the Company received $6.1 million face value in Tonogold CPS.

The CPS became convertible into common shares on May 22, 2020.

The conversion price for the CPS was the lower of (1) $0.18 cents per share, or (2) 85% of the 20-day volume weighted average closing price of Tonogold common shares.

Tonogold could redeem the CPS prior to conversion, at a redemption price 120% of the face value of the CPS.

The CPS was recorded by the Company at a fair value of $7.6 million when received.

On May 22, 2020, and September 29, 2020, the Company elected to convert $1.1 million and $2.8 million of CPS, respectively, at $0.18 per common share, for a total of 21,777,778 Tonogold common shares.

On October 2, 2020, Tonogold redeemed the remaining $2.2 million of CPS for $2.6 million in cash, representing 120% of face value.

On December 16, 2020, the Company entered into an agreement with Wingfield Tono LP ("Wingfield") for the purchase of up to 15,666,667 Tonogold common shares at a fixed price of $0.33 per share, in three tranches scheduled for December 23, 2020, January 15, 2021, and February 1, 2021.

The Company received $0.9 million from Wingfield through December 31, 2020.

During the year ended December 31, 2020, the Company sold 8,645,918 Tonogold common shares at an average price of $0.37 per share for gross proceeds of $2.9 million (plus a $0.2 million related receivable).

At December 31, 2020, the Company has total investments in Tonogold of 13,131,860 common shares valued at $3.9 million.

The fair value of the common shares is based on the $0.30 closing share price (OTC:

TNGL) on December 31, 2020.

See Note 15, Fair Value Measurements, and Note.

22, Subsequent Events, to the consolidated financial statements.

Tonogold Note Receivable - The consideration received for Tonogold's acquisition of Comstock LLC included the Note.

The Note had an initial principal balance of $5,475,000 when the Note was issued on March 20, 2020.

The outstanding principal balance was $4,475,000 when the Purchase Agreement closed on September 8, 2020.

The Note has an interest rate of 12% per annum, with interest payable monthly.

The outstanding principal balance is due on September 20, 2021, unless extended by the Company.

The Note includes the following features:

1) conversion feature allowing the Company, in its option, to elect payment in Tonogold common shares upon certain events;

2) change of control redemption right allowing the Company to redeem the Note in cash at a 125% premium;

3) event of default redemption right allowing the Company the right to elect redemption of the Note in cash at a 118% premium;

and 4) an option for the Company to extend the maturity date.

On September 8, 2020, the fair value of the Note was $6.1 million, based on a Monte Carlo model with various inputs, including the Tonogold common share price of $0.35, volatility of 96%, risk-free rate of 0.15%, cost of debt of 11.12%, required conversion premium of 30%, probability of prepayment of 5%, probability of change of control of 5% and probability of default of 27%.

On December 31, 2020, the fair value was updated with a Tonogold common share price of $0.30, resulting in a fair value of $5.5 million, and a loss on change in fair value of $0.6 million recorded in other expense in the consolidated statements of operations.

Contingent Forward - The Note was previously accounted for as a contingent forward.

In evaluating the accounting for the Note, the Company determined that, although the Note represents legal form debt, it should be evaluated and accounted for based on the substance of the arrangement rather than its legal form.

The Company concluded that the Note represented a contingent forward for the Company’s right to sell its membership interests in Comstock LLC to Tonogold at a future date in exchange for cash consideration or common stock of Tonogold if certain options were elected (the “Contingent Forward”).

The Company identified the Contingent Forward as a derivative which was adjusted to fair value at the end of each reporting period.

The Company recorded the $1.2 million initial fair value of the Contingent Forward in additional paid in capital since Tonogold, a related party at the time, owned 50% of the membership interests of Comstock LLC.

The fair value of the contingent forward asset on September 8, 2020 was $2.0 million, and was an offset to the consideration received for the sale of Comstock LLC recorded on September 8, 2020.

Upon closing of the Purchase Agreement, the contingencies were eliminated, and the Note was recorded as a current asset on the consolidated balance sheets.

Mineral Exploration and Mining Lease for Storey County Properties

On September 16, 2019, as amended and restated on December 23, 2019, the Company, as lessor, entered into a 10-year, renewable mineral exploration and mining lease with Tonogold for certain mineral properties owned or controlled by the Company in Storey County, Nevada (the "Exploration Lease").

The Exploration Lease grants Tonogold the right to use these properties for mineral exploration and development, and ultimately the production, removal and sale of minerals and certain other materials.

Tonogold pays the Company a quarterly lease fee of $10,000.

The lease fee escalates 10% each year on the anniversary date of the Exploration Lease.

Tonogold also reimburses the Company for all costs associated with owning the properties, including lease payments for underlying, third-party leases.

The Exploration Lease also provides for royalty payments when mining operations commence.

For the first year following the commencement of mining, royalties will be paid to the Company at the rate of 3.0% of NSR for the properties.

The rate will be reduced to 1.5% of NSR thereafter.

The Exploration Lease provides that Tonogold’s exploration spending, permitting, and engineering commitments will be a cumulative total of at least $20.0 million over 20 years, at the rate of $1.0 million per year.

Tonogold also committed to specific milestones for issuing technical reports on their results, culminating in a published Feasibility report by the 20 th anniversary of the Exploration Lease.

Tonogold is currently conducting exploration drilling targeting the Gold Hill and Occidental targets in Storey County.

The initial term of the Exploration Lease (the "Exploration Term") is 5 years, with Tonogold committing to spending at least $5.0 million for exploration, and to producing an NI 43-101 compliant technical report by the end of the 5 th year.

The Exploration Lease will automatically renew for a second, 10-year term (the "Development Term") as long as the commitments have been met.

During the Development Term, Tonogold is committed to $10.0 million of additional expenditures for exploration, development, and technical reporting, and to producing an economically viable mine plan and an NI 43-101 compliant Pre-Feasibility report before the agreement's 15 th anniversary.

The Exploration Lease will automatically renew for a third, five-year term (“the Planning Term”) provided that the prior spending and reporting commitments have been met.

During the Planning Term, Tonogold is committed to $5.0 million in additional expenditures for exploration, development, permitting, and technical reporting.

By the 20 th anniversary of the

agreement, Tonogold also commits to producing an economically viable mine plan, and an NI 43-101 compliant Feasibility Report, and will produce a mutually agreed-upon schedule for placing the properties into production.

If the spending and other commitments have been met during the Planning Term, the Exploration Lease will automatically continue in effect as long as development and permitting activities continue in compliance with a mutually agreed-upon schedule, or for so long as minerals are produced from the properties or from adjacent properties (the "Extended Term").

Lease Option Agreement for the American Flat Processing Facility

On November 18, 2019, the Company, as lessor, entered into the Lease Option Agreement to lease its permitted American Flat property, plant and equipment to Tonogold for crushing, leaching and processing material from the Lucerne Mine.

Under the Lease Option Agreement, Tonogold is required to reimburse the Company approximately $1.1 million in expenses per year to maintain the option.

If the option is exercised, Tonogold will then pay the Company a rental fee of $1.0 million per year plus $1 per processed ton, in addition to all the costs of operating and maintaining the facility, up to and until the first $15.0 million in rental fees are paid, and then stepping down to $1.0 million per year and $0.50 per processed ton for the next $10.0 million paid to the Company.

The Lease Option Agreement remains in effect, but has not yet been exercised.

Reimbursements

Total reimbursements under the three Tonogold agreements, including, but not limited to, all costs associated with owning the properties, lease and option payments and lease income for the years ended December 31, 2020 and 2019 were $2.9 million and $2.2 million, respectively.

Mercury Clean Up, LLC Pilot and Joint Venture Agreements

The MCU Agreement

On June 21, 2019, as amended July 3, 2019, April 10, 2020 and December 4, 2020, the Company entered into a Mercury Remediation Pilot, Investment and Joint Venture Agreement (the “MCU Agreement”) with Mercury Clean Up, LLC ("MCU").

Pursuant to the MCU Agreement, the Company committed $2.0 million of capital contributions that was payable in cash of $1.15 million and shares of the Company's common stock of $0.85 million, in exchange for 15% of the fully-diluted membership interest of MCU and the first right to participate in 50% of the equity of any future joint ventures formed with MCU (the “Joint Ventures”).

Based on successful proof of technical and commercial viability, the Company has the rights to coordinate an additional $3.0 million in financing for the Joint Ventures, and MCU would then contribute the 25-ton-per-hour system, based on an agreed upon capital plan (equipment and working capital uses) and a time-specific project schedule, including the timing of the capital needs.

Completing $2.0 million of such financing entitles the Company to an additional 10% of the fully-diluted membership interests of MCU.

MCU Investment

Cash - The Company made cash payments to MCU of $750,000 during 2019, and $400,000 during 2020, bringing the total to $1,150,000 in cash and satisfying the required cash contribution.

Shares of Common Stock - The MCU Agreement contains a provision whereby the Company is required to issue additional shares of its common stock for the difference between the value of the Company's common shares received by MCU and the required stock-based investment of $850,000.

On July 18, 2019, the Company issued 900,000 shares of restricted common stock with a fair value of $751,050 to fund the MCU capital contribution.

During the three months ended June 30, 2020, MCU sold the 900,000 common shares for net proceeds of $465,127, reducing the remaining make-whole liability to $384,873.

On May 15, 2020, the Company issued MCU an additional 625,000 shares of restricted common stock with a fair value of $314,687.

On December 4, 2020, the 625,000 remaining common shares became transferable, and MCU and the Company agreed that MCU received consideration in excess of the required $2.0 million, and the Company became the fully vested owner of 15% of the fully-diluted membership interest of MCU and became entitled to 50% participation in the Joint Ventures.

As of December 31, 2020, the total purchase price of $2.0 million, paid in cash and stock, is accounted for as Investment in

Mercury Clean Up, LLC, a non-current asset on the consolidated balance sheets.

The investment is accounted for under the equity method.

When liquidated by MCU, the value received for the remaining shares in excess of the required investment will be applied to the Company's investment in the Joint Ventures.

As of December 31, 2020, the excess value was $265,127, accounted for as Derivative asset related to MCU, a current asset on the consolidated balance sheets.

MCU Philippines, Inc.

On April 10, 2020, the Company entered into a second amendment of the MCU Agreement, wherein MCU and the Company have identified an opportunity to remediate mercury in the Philippines, specifically in the province of Davao d' Oro (the “Philippine Opportunity”).

In July 2020, MCU formed MCU Philippines, Inc.

("MCU-P") to engage in the Philippine Opportunity.

On December 4, 2020, the Company became fully entitled to 50% participation in the Joint Ventures, was issued 50% of the common stock of MCU-P, and the Company’s chief executive officer was appointed a director of MCU-P.

During 2020, the Company made cash loans to MCU-P of $1.2 million, in the form of senior secured interest free loans, and committed up to another $1.8 million in secured loans.

At such time as the Company's loans to MCU-P reach $2.0 million, the Company will receive an additional 10% membership interest in MCU.

Because the transaction had not previously closed, these amounts were recorded as Deposits for Investment in MCU Philippines, Inc on the consolidated balance sheets at September 30, 2020.

As of December 4, 2020, when the Company was granted 50% participation in the Joint Ventures, the deposits were recorded as a senior secured interest free note receivable due December 31, 2024.

At December 31, 2020, the fair value of the note receivable from MCU-P is valued at the $1,080,000 face amount less a discount of $319,060, representing the present value of the interest free benefits of the note.

The discounted present value is based on the alternative borrowing cost of MCU-P, considering market data for companies with comparable credit ratings.

As of December 31, 2020, the fair value of the note receivable is recorded in Notes receivable and advances, net, and an amount equal to the original unamortized discount is included in Investment in MCU Philippines, Inc., a non-current asset on the consolidated balance sheets at December 31, 2020.

The investment is accounted for under the equity method.

See Note 15, Fair Value Measurements, to the consolidated financial statements.

Pelen Limited Liability Company Membership Interest

Investment in Pelen Limited Liability Company Membership Interest

Pelen owns 100% of the historic Sutro Tunnel Company ("Sutro") which, in turn, owns the Sutro townsite, the historic six-mile Sutro Tunnel, the federal land grants and mining rights extending 1,000 feet on each side of the six-mile tunnel, the rights to the tunnel’s water, and patented mining claims and private lands on Gold Hill.

In January 2018, the Company issued 295,082 shares of restricted common stock as initial payment to acquire 25% of the total membership interests of Pelen.

In November 2018, the Company issued 351,637 shares of restricted common stock as additional shares based on the shortfall of the aggregate proceeds for the initial shares.

On April 24, 2020, the Company completed the acquisition of 25% of the total membership interests of Pelen, settling all remaining amounts due.

The total purchase price was $0.6 million, paid in stock and cash and recorded as Investment in Pelen Limited Liability Company, a non-current asset on the consolidated balance sheets at December 31, 2020.

The investment is accounted for under the equity method.

Purchase Option for Pelen Limited Liability Company

On September 1, 2020, the Company paid $100,000 for a one-year option (the "Option") to purchase the remaining 75% of the membership interests of Pelen, for a purchase price of $3,750,000.

The Option can be extended for a second year for an additional option fee of $100,000, with the purchase price increased to $4,400,000;

and can be extended for a third year for another additional option fee of $100,000, with the purchase price increased again to $5,000,000.

If the Option is exercised, half of all option payments will be credited to the purchase price.

The $100,000 option payment is included in Prepaid expenses and other current assets on the consolidated balance sheets at December 31, 2020.

Sutro Tunnel Company Mineral Exploration and Mining Lease

On September 1, 2020, the Company entered into a new mineral exploration and mining lease with Sutro, which is wholly-owned by Pelen.

The lease covers patented mining claims, exploration rights, and access over and through town lots in Gold Hill and Virginia City, Nevada.

The lease also provides the right to explore the Sutro Tunnel.

The previous lease with Sutro expired December 31, 2017, and had been extended on a month-to-month basis.

Sierra Springs Opportunity Fund, Inc.

Investment in Sierra Springs Opportunity Fund Inc.

During 2018 and 2019, Comstock’s Board of Directors approved the Company entering into an investment in a certain opportunity zone fund in northern Nevada.

During 2019, Comstock invested $335,000 into a qualified opportunity zone fund Sierra Springs Opportunity Fund, Inc.

Sierra Springs Enterprises, Inc.

("SSE") is wholly owned by SSOF.

It is anticipated the Company could own approximately 9% of SSOF upon issuance by SSOF of 75.0 million authorized shares to investors.

The Company’s chief executive officer is the president and a director of SSOF and an executive and a director of SSE.

Comstock’s $335,000 investment in SSOF is recorded on the consolidated balance sheets at December 31, 2020, and 2019, as Investment in Sierra Springs Opportunity Fund, Inc., a non-current asset.

The investment is accounted for at cost less impairment because there is no ready market for the investment units.

Management has identified no events or changes in circumstances that might have had a significant adverse effect on the carrying value of the investment.

Management concluded it was impractical to estimate fair value due to the early stage of the fund and the absence of a public market for its stock.

Silver Springs Properties

On September 26, 2019, as amended on November 30, 2019, December 26, 2019, March 31, 2020, June 30, 2020, October 1, 2020, and December 30, 2020, the Company entered into agreements with SSE to sell the Company's two Silver Springs properties (the "Silver Springs Properties"), including 98 acres of industrial land and senior water rights for $6.5 million and 160 acres of commercial land along with its rights in the membership interests in Downtown Silver Springs ("DTSS") for $3.6 million.

Accordingly, the properties are classified as assets held for sale on the consolidated balance sheets at December 31, 2020 and 2019.

On December 9, 2019, the Company purchased 100% of the membership interests in DTSS, including 160 acres of centrally located land in Silver Springs, Nevada, and related approvals for a commercial downtown development.

The DTSS acquisition was accounted for as an asset acquisition, as DTSS did not meet the definition of a business.

The Company paid total consideration of $4.1 million.

Based on the agreement with SSE to sell the Silver Springs Properties, the carrying value of the land was adjusted to the contract value of $3.6 million less estimated costs to sell, resulting in an impairment of $0.5 million, charged to other expense in the consolidated statements of operations for the year ended December 31, 2019.

As of December 31, 2020, the Company has received deposits in cash and escrow from SSE totaling $0.4 million towards the purchase of the Silver Springs Properties, recorded in Deposits under current liabilities on the consolidated balance sheets.

The transactions are expected to close during 2021.

Advance to Sierra Springs Opportunity Fund Inc.

As of December 31, 2020, the Company had advanced SSOF $1,650,000, for deposits and payments on land and other facilities related to investments in qualified businesses in the opportunity zone.

The advances are expected to be repaid during 2021, upon the sale of the Company’s Silver Springs Properties to SSE.

As of December 31, 2020, the advances totaling $1,650,000 are recorded as a current asset on the consolidated balance sheets in Notes receivable and advances, net.

The Company’s maximum exposure to loss as a result of its involvement with SSOF and SSE is limited to the total of its current investment in and advances to SSOF.

See Note 22, Subsequent Events, to the consolidated financial statements.

LINICO Corporation Investment

On February 15, 2021, the Company, Aqua Metals Inc., a Delaware corporation (“AQMS”) and LINICO Corporation, a Nevada corporation (“LiNiCo”) entered into a Series A Preferred Stock Purchase Agreement (the “LiNiCo Stock Purchase Agreement”).

Pursuant to the LiNiCo Stock Purchase Agreement, and subject to the satisfaction or waiver of specified

conditions, the Company will make an initial purchase of 6,250 shares of LINICO Series A Convertible Preferred Stock (“Series A Preferred”) in exchange for 3,000,000 shares of Company restricted common stock and $4.5 million in cash payments.

The Series A Preferred shares will have a conversion price of $1.25 per share.

Pursuant to the LiNiCo Stock Purchase Agreement, the Company and AQMS entered into warrant agreements wherein the Company has the right to purchase 2,500 shares of Series A Preferred for a total exercise amount of $2.5 million and AQMS has the right to purchase 500 shares of Series A Preferred for a total exercise amount of $500,000.

The Series A Preferred received by the Company pursuant to the exercise of the warrant may be converted into common stock at conversion price of (i) $1.25, if exercised on or before February 15, 2022 or (ii) $2.00, if exercised after February 15, 2022.

Pursuant to certain terms and conditions of an industrial lease between LiNiCo and Aqua Metal Reno Inc., entered into on February 15, 2021 (the “LiNiCo Lease Agreement”), the Company also may exercise the right to purchase the land, buildings and related improvements located at 2500 Peru Drive, McCarran, Nevada 89343 for (i) $14,250,000, if the purchase is made on or prior to October 1, 2022 or (ii) $15,250,000, if the purchase is made after October 1, 2022, See Note 22, Subsequent Events to the consolidated financial statements).

The outbreak of the coronavirus (aka “COVID-19”) has resulted in governments worldwide enacting emergency measures to combat the spread of the virus.

These measures, including the implementation of social distancing measures, quarantine periods and travel bans, have caused material disruptions to many businesses and negatively impacted economic activities.

Global equity markets have experienced significant volatility.

Governments and their central banks have reacted with significant fiscal and monetary interventions designed to mitigate the impacts and stabilize economic conditions.

The impact and ultimate duration of the COVID-19 outbreak is currently unknown, as is the efficacy of these governmental and central bank interventions.

On March 12, 2020, Nevada Governor Stephen Sisolak issued a Declaration of Emergency to facilitate the State’s response to the COVID-19 pandemic.

The Governor's guidance for the mining industry includes limiting gatherings to no more than 10 people, maintaining social distancing protocols where 10 or less are gathered, limiting travel, and working remotely when possible.

The Company is currently operating in alignment with these guidelines for protecting the health of our employees, partners, and suppliers, and limiting the spread of COVID-19, that could potentially result in delays to the Company's plans for developing our Dayton Resource, MCU’s plans for commencing mercury recovery testing, and Tonogold's plans for exploration drilling during the second quarter of 2020.

It is not currently possible to reliably estimate the length and severity of these developments and the impact on the financial results and conditions of the Company, and its operating subsidiaries and partners, or in future periods.

During the first quarter of 2020, the Company expects to receive approximately $1.35 million in cash for expense reimbursements required under the Tonogold agreements.

During the last nine months of 2020, and the first nine months of 2021, the Company expects to receive monthly interest payments of $54,750 from Tonogold toward its purchase of 100% of the membership interest in Comstock Mining LLC, the entity that owns the Lucerne properties.

As of December 31, 2019, Tonogold has earned 50% of the membership interest after making payments of over $6.0 million in cash and $6.1 million in CPS.

The Company plans on monetizing a portion of the CPS during the second half of 2020, depending on price performance and liquidity.

During the first half of 2020, the Company expects to close on the agreed upon sale of certain non-mining assets located in Silver Springs, NV, to Sierra Springs Enterprises Inc., for total net proceeds of $10.1 million.

The agreements were signed in September 2019, with $0.4 million of non-refundable deposits made and released to the Company from escrow.

The Company will use the remaining $9.7 million of proceeds to extinguish the entirety of its outstanding Senior Secured Debenture obligation, principal and make-whole of approximately $4.9 million , plus accrued interest of approximately $0.3 million .

Our annual operating expenses, including other income and expenses and excluding depreciation, are planned at $4.9 million, with approximately $2.3 million of that amount currently being reimbursed under the Tonogold Purchase Agreement, Lease-Option Agreement, and Mineral Exploration and Mining Lease Agreement, resulting in net operating expenses for 2020, excluding exploration spending, of $2.6 million.

Tonogold is currently planning and permitting a drilling program for the Storey County exploration targets, including the leased mineral claims, just north of the Lucerne area, and expects to begin drilling in the second quarter of 2020.

Under the Mineral Exploration and Mining Lease, Tonogold must spend at least $1.0 million per year on exploration.

The Company’s 2020 plans also include obtaining the local permits for Dayton, expanding Dayton’s current resource and continuing southerly into Spring Valley with incremental exploration programs that include exploration and definition drilling of targets identified by geophysical surveys, surface mapping, prior drilling and deeper geological interpretations that all lead to publishing an updated, NI 43-101 compliant, mineral resource estimate for the Dayton.

For 2020, the Company’s plans also include advancing the investment in and the commercialization of MCU’s mercury remediation processing technologies.

The Company expects to close on the MCU transactions during the second and third quarters of 2020.

Oro has commenced manufacturing the 2-to-25 ton per hour mercury recovery plant and recently completed the critical “reverse-helix spiral concentrator” component of the system.

The mercury remediation system includes a 200 gallon-per-minute dissolved air flotation (“DAF”) water treatment plant and a fully operational, mercury-specific metallurgical laboratory.

The entire system will be mounted on three separate trailers and will be set up on the Company’s fully contained, double-lined processing area during the fourth quarter with the first equipment delivered to the processing site during March 2020.

During the first quarter of 2020, MCU identified sample locations within the Carson River Mercury

Superfund Site (“CRMSS”) that are currently being sampled per an EPA-approved and updated Sampling and Analysis Plan (“SAP”).

Once suitable sites have been identified, bulk samples will be extracted and transported to the MCU mercury remediation system located at the Company’s American Flat processing facility.

MCU plans to commence trial operations in the second quarter of 2020, at the Company's American Flat processing facility, to validate and fine-tune the mercury extraction and remediation process, with the objective of reclaiming and remediating the Company's existing properties within the Carson River Mercury Superfund Site ("CRMSS"), enhancing the values of, and evaluating the potential economic feasibilities for, these properties and creating new global growth opportunities in mercury remediation by demonstrating MCU’s technological and operational effectiveness, efficiency, and feasibility.

MCU has agreed and plans to commence reclamation operations in the third quarter 2020, in the Philippines.

MCU has signed a joint venture agreement with Clean Ore Solutions, a Philippine Company, for mercury extraction and remediation of Mount Diwalwal and the Naboc River, one of the most mercury polluted, gold mining regions in the world.

This representing the first real international opportunity for large-scale mercury remediation and environmental reclamations, using MCU’s system, with the objective of establishing MCU as the global leader in large scale, mercury remediation projects.

On March 20, 2020, Philippines Department of Transportation (PDOT) announced "a temporary travel ban on foreigners" entering the Philippines starting midnight March 22, 2020, the ultimate durations of which are currently unpredictable, potentially resulting in delays to MCU’s and the Company’s plans for commencing operations in the Philippines during third quarter of 2020.

The impact and ultimate duration of the COVID-19 outbreak is currently unknown, as is the efficacy of these governmental interventions.

On January 11, 2021 Nevada Governor Steve Sisolak and the Nevada Department of Health and Human Services, Division of Public and Behavioral Health, Nevada State Immunization Program (NSIP) announced the NSIP is working with Nevada’s local health departments, hospitals, and clinics to distribute COVID-19 vaccines as they become available.

NSIP is identifying facilities that have the capacity to properly stock, administer, and maintain COVID-19 vaccine and meet additional federal and state requirements.

Governor Sisolak signed Emergency Directive 033 that became effective on October 1, 2020, to facilitate larger gatherings and events while still diminishing personal contact and increasing the level of disinfection in high use areas.

The controlling guidance below accompanies the requirements set forth in Directive 033.

In order to minimize the risk of contracting and spreading the virus, minimum strict adherence to safety and infection prevention measures must be followed.

All event venues, gathering organizers, hosts and individuals throughout the State must be fully compliant to ensure a successful next step in our reopening.

The controlling guidance below is for planning, coordinating, or hosting in-person gatherings (e.g., events, conventions, corporate meetings, services, ceremonies and celebrations).

These gatherings may take place in outdoor or indoor venues, including but not limited to, community centers, fellowship halls and gatherings spaces in faith-based buildings, halls, rental space in event centers, or outdoor event spaces.

The guidance includes, but is not limited to, implementing 6-foot physical distancing practices, wearing face coverings at all times, conducting health screenings for all events, employees, and visitors by measuring temperature, and assessing detectible symptoms, among other required practices.

The Company is operating in alignment with these guidelines for protecting the health of our employees, partners, and suppliers, and limiting the spread of COVID-19, that have already resulted in delays of MCU’s plans for commencing mercury recovery testing on the Comstock District and in the Philippines.

It is not currently possible to reliably estimate the length and severity of these delays and the impact on the Company's financial condition, and that of its subsidiaries and partners, in future periods.

See Note 2, Significant Transactions, to the consolidated financial statements.

The Company has approved a three-year, strategic plan with specific performance objectives designed to deliver per-share value over the next three years, while positioning the Company for continued growth beyond 2023.

The plan objectives include establishing and growing the value of our existing mineral properties and royalty stakes, commercializing and growing a global, ESG-compliant, profitable mercury remediation business, and separately monetizing over $25 million in non-strategic assets for funding this growth.

The specific performance objectives include:

Commercialize a global, ESG-compliant, profitable, mercury remediation and other critical mineral systems:

• Establish the technical efficacy of MCU’s Comstock Mercury System, and protect the intellectual property;

• Deploy and operate the first international mercury remediation project by deploying MCU’s second and third mercury remediation systems into the Philippines;

• Identify, evaluate and prioritize a pipeline of potential mercury remediation projects;

then deploy the third and fourth mercury remediation projects, producing extended, superior cash flow returns;

• Assess and acquire accretive, ESG-based, strategic and critical mineral expansion opportunities.

Establish and grow the value of our mineral properties:

• Establish the Dayton Resource area’s maiden, stand-alone mineral resource estimate;

• Expand the Dayton-Spring Valley Complex through exploration drilling and geophysical modelling;

• Develop the expanded Dayton-SV Complex toward full economic feasibility, supporting a decision to mine;

• Entitle the Dayton-SV Complex with geotechnical, metallurgical, environmental studies and permitting;

• Validate the Comstock NSR Royalty portfolio (e.g., Lucerne Mine, Occidental Lode, Comstock Lode).

Monetize non-strategic assets and build a quality organization:

• Monetize our third-party, junior mining securities responsibly, for $12.5 million or more;

• Monetize our non-mining assets for $12.5 million, excluding the Gold Hill Hotel;

• Grow the value of our Opportunity Zone investments to over $30 million;

• Deploy a systemic organization, capable of accelerating growth and handling complexity.

The plan is designed to deliver per-share value over the next three years, while positioning the Company for continued growth.

Our annual operating expenditures, excluding depreciation, are planned at approximately $6.0 million, with approximately $2.0 million of that amount being reimbursed under the various Tonogold agreements, resulting in net operating expenses for 2021, of approximately $4.0 million.

During the second quarter of 2021, the Company expects to close the sale of certain properties located in Silver Springs, Nevada, to Sierra Springs Enterprises Inc., for total proceeds of approximately $10.0 million.

The agreements, as amended, included $0.4 million of non-refundable deposits made and released to the Company from escrow.

The Company will use a portion of the proceeds from the sale to pay the outstanding $3.3 million of its three remaining unsecured promissory notes entered into on August 6, 2020 and two additional promissory notes, entered into on December 4, 2020, with the Concorde Trust and GHF Inc.

(the "Promissory Notes"), plus accrued interest.

The Company’s 2021 plans also include updating the Dayton’s current resource estimate and continuing southerly into Spring Valley with incremental exploration programs that include recently completed geophysical surveys, surface exploration and definition drilling of targets identified by the geophysical surveys, surface mapping, prior drilling and deeper geological interpretations that all lead to publishing a new, SK-1300 compliant, mineral resource estimate.

Tonogold is currently permitting a drilling program for the Storey County exploration targets, including the leased mineral claims, just north of the Lucerne area, and announced on September 8, 2020, the commencement of a fully funded drilling program, estimated at $7 million, in one of the most historically significant portions of the Comstock Lode.

Tonogold's initial drilling will focus on the nearly two-mile mineralized strike length where most of the historical production was located, and some of the highest known gold and silver grades were encountered on the Comstock Lode and the Occidental Lode.

The Company’s remaining 2021 plans include advancing the investment in and the commercialization of MCU’s mercury remediation processing technologies.

The Company expects to increase its funding of MCU-P to $2.0 million during the first quarter of 2021, meaning, at that time, it will increase its ownership of MCU to 25%, in addition to its 50% ownership of MCU-P, the first joint venture in the Philippines.

MCU-P has delivered its first international system to the Philippines and plans to commence reclamation operations in March 2021.

MCU-P will operate under a joint venture agreement with Clean Ore Solutions, a Philippine Company, for mercury extraction and remediation of Mount Diwalwal and the Naboc River, one of the most mercury polluted, gold mining regions in the world.

This represents the first real international opportunity for large-scale mercury remediation and environmental reclamations, using MCU’s systems, with the objective of establishing MCU as a leader in mercury remediation projects and, in particular, contamination caused by artisanal and small-scale miners.

MCU will continue trial operations on the Comstock throughout 2021, at the Company's American Flat processing facility, to validate and fine-tune the mercury extraction and remediation process, with the objective of reclaiming and remediating the Company's existing properties within the CRMS, enhancing the values of, and evaluating the potential economic feasibility for, these properties and creating new global growth opportunities in mercury remediation by demonstrating MCU’s technological and operational effectiveness, efficiency, and feasibility.

Equity Raises

During the years ended December 31, 2019, and 2018, the Company issued 12,168,834 and 5,620,434 shares, respectively.

During 2019, 10,015,443 common shares were issued through equity issuance agreements, issuance of common stock for convertible preferred, and private placement agreements, at an average price per share of $0.52 for gross proceeds of $5.2 million ($ 4.9 million , net of cash issuance costs).

During 2018, 4,243,371 common shares were issued through the Company’s equity issuance and private placement agreements at an average price per share of $1.06 , for gross proceeds of approximately $4.5 million ( $4.2 million , net of cash issuance costs).

During the years ended December 31, 2020 and 2019, the Company issued 7,744,277 and 12,168,834 shares of common stock, respectively.

During 2020, 5,921,219 common shares were issued through equity issuance and private placement agreements, at an average price per share of $0.73 and gross proceeds of $4.3 million ($4.1 million, net of issuance fees).

During 2019, 8,282,124 common shares were issued through equity issuance and private placement agreements at an average price per share of $0.54 and gross proceeds of approximately $4.5 million ($3.8 million, net of issuance fees).

Common shares outstanding at December 31, 2020 and 2019 totaled 34,980,766 and 27,236,489, respectively.

Following is a reconciliation of the stock-based transactions as of December 31, 2019 :

Shares Outstanding as of beginning of year

Shares issued for:

Equity issue agreements

Issuance of common stock for convertible preferred

Private placement agreements

Reverse split fractional shares

Common stock issuance costs

Purchase of mineral rights

Purchase of Pelen, LLC membership interest

Investment in Mercury Clean Up LLC

Total shares issued

Shares outstanding as of end of year

See Item 1, Business, Financing Events, and Note 14, Equity, to the consolidated financial statements.

Comparative Financial Information

Below we set forth a summary of comparative financial information for the twelve months ended December 31, 2019 , 2018 , and 2017 .

2019 versus 2018

Below we set forth a summary of comparative financial information for the years ended December 31, 2020 and 2019.

2020 2019 Difference

2020 versus 2019

3 unchanged sentences

Real estate operating costs 802,307 37,562 764,745

Exploration and mine development

Exploration and pre-development costs 835,202 750,647 84,555

Mine claims and costs 135,859 174,173 (38,314)

1 unchanged sentence

General and administrative 3,551,800 3,307,195 244,605

Total costs and expenses 5,675,961 5,524,085 151,876

Loss from Operations (5,474,261) (5,344,453) (129,808)

OTHER INCOME (EXPENSE)

Gain on sale of membership interests in Comstock Mining LLC 18,275,846 — 18,275,846

Interest expense (421,887) (879,530) 457,643

Other income (expense)

The Company ceased processing material from its leach pad in December 2016, resulting in no mining revenues for the years ended 2019 , 2018, and 2017.

Real estate revenue was $0.2 million for the years ended December 31, 2019 and 2018 .

The Company owns various real estate properties including the historic Gold Hill Hotel, various homes and cottages in the Comstock historic district and the Daney Ranch in Dayton, NV.

The Company owns the properties while leasing them to independent operators, businesses and individuals.

The increase in 2019 resulted from leasing additional properties, including leasing our metallurgical laboratories during 2019.

Real estate revenue increased $0.1 million for the year ended December 31, 2018, as compared to the year ended December 31, 2017, primarily due to higher utilization of the other properties to individuals and businesses.

Real estate operating costs decreased for the year ended December 31, 2019, as compared to the year ended December 31, 2018, primarily due to lower maintenance costs for the properties.

Real estate operating costs decreased for the year ended 2018, compared to the same period in 2017, primarily due to lower property maintenance costs.

Costs applicable to mining revenue decreased by $ 1.3 million for the year ended December 31, 2019 , as compared to 2018 .

Costs for the years ending in 2019 and 2018, consisted solely of depreciation expense on temporarily idled mining equipment, processing facilities, and heap leach pads, and certain of the idled assets have been fully depreciated.

Costs applicable to mining revenue decreased by $0.6 million for the year ended December 31, 2018 , as compared to 2017 .

The reduction was the result of a full year of lower processing costs and lower depreciation expense.

Exploration and mine development expenses decreased by $0.2 million for the year ended December 31, 2019 , as compared to the year ended December 31, 2018 .

The decrease was primarily the result of an increase in reimbursements from Tonogold.

Exploration and mine development costs decreased by $0.2 million for the year ended December 31, 2018 , as compared to the year ended December 31, 2017 .

The decrease represents the cessation of the remaining underground exploration and development costs and related staff, in early 2017.

Mine claim and costs were essentially flat for the year ended December 31, 2019 , as compared to the year ended December 31, 2018 .

Mine claim and costs decreased by $0.9 million for the year ended December 31, 2018, as compared to the year ended December 31, 2017.

The decrease is primarily due to payments being fully reimbursed during 2018, as compared to being reimbursed for only a part of 2017, in accordance with the previous Tonogold Option agreement signed in late 2017.

Environmental and reclamation costs decreased by $0.5 million for the year ended December 31, 2019, as compared to the year ended December 31, 2018.

The decrease is the result of a reduction of approximately $0.4 million in the reclamation obligation estimate resulting from completed reclamation and higher reimbursements from Tonogold.

Environmental and reclamation expenses decreased $0.5 million for the year ended December 31, 2018, as compared to the year ended December 31, 2017.

The decrease is the result of lower environmental consulting and lower third-party expenses associated with engineering services and mine planning associated with underground drilling results from the Lucerne development.

General and administrative expenses decreased by $0.1 million for the year ended December 31, 2019 , as compared to the year ended December 31, 2018 .

The decrease is a result of lower compensation and consulting fees, somewhat offset by higher legal fees.

Other income (expense) (Note 17) 2,552,272 2,418,116 134,156

Net income (loss) $ 14,931,970 $ (3,805,867) $ 18,737,837

The Company ceased processing material from its leach pad in December 2016, resulting in no mining revenues for the years ended December 31, 2020 and 2019.

Real estate revenue increased $22,068 for the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily related to an increase from the Daney Ranch lease signed September 1, 2020, and higher rental utilization on other properties, partially offset by a decrease in rentals of our metallurgical labs at the Company's processing site and a decreased rental rate with the Gold Hill Hotel lessees.

Real estate operating costs increased $764,765 for the year ended December 31, 2020, as compared to the year ended December 31, 2019, substantially due to higher depreciation expense of $683,173 associated with recognizing the depreciation that would have been charged for previous periods while the Gold Hill Hotel and Daney Ranch properties were classified as assets held for sale.

In addition, $38,184 of current period depreciation was recorded for those properties for the year ended December 31, 2020.

Other depreciation, maintenance and utility costs accounted for the remainder of the increase.

Costs applicable to mining revenue decreased by $1.3 million for the year ended December 31, 2020, as compared to the year ended December 31, 2019 as a result of certain assets becoming fully depreciated, and the sale of Comstock LLC.

These costs consist solely of depreciation expense on temporarily idled mining equipment, processing facilities and heap leach pads.

Exploration and pre-development costs increased by $0.1 million for the year ended December 31, 2020.

as compared to the year ended December 31, 2019, primarily due to the cost of conducting an airborne geophysical survey of the Company's resource areas and exploration targets, partially offset by lower costs for permits, licenses and fees, water payments and payroll.

Mine claim and costs decreased by $38,314 for the year ended December 31, 2020 compared to 2019, primarily due to timing of reimbursements from Tonogold.

Environmental and reclamation costs increased by $0.4 million for the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to a reduction of approximately $0.4 million in the reclamation obligation estimate in 2019, resulting from reclamation activities completed by the Company.

General and administrative expenses increased by $0.2 million for the year ended December 31, 2020, as compared to the year ended December 31, 2019.

The increase is a result of a gain of $0.3 million from the sale of fixed assets in 2017, along with an increase of $0.4 million in legal and consulting fees in 2018.

Interest expense decreased by $0.5 million for the year ended December 31, 2019 , as compared to the year ended December 31, 2018 , primarily due to lower average debt balances during 2019, and to a lesser extent, higher reimbursements of interest expense from Tonogold, that commenced on June 1, 2019.

Interest expense decreased by $0.3 million for the year ended December 31, 2018 , as compared to the year ended December 31, 2017 , primarily due to lower average debt balances.

Other income and expense, net, increased $3.1 million for the year ended December 31, 2019 , as compared to the year ended December 31, 2018 .

The increase resulted from $2.2 million income from the termination of the Tonogold Option and $1.5 million of income from mark to market gains on the Tonogold shares that are carried at fair value, somewhat offset by preferred share issuance costs and the write down of certain assets held for sale.

Other income and expense, net, for the year ended December 31, 2018, as compared to the year ended December 31, 2017, decreased $0.7 million primarily due to make-whole provisions for the Pelen minority interest purchase.

Net loss was $3.8 million and $9.5 million for the years ended December 31, 2019 , and 2018 , respectively.

The decrease of $5.7 million resulted from a $3.1 million increase in other income, a $2.1 million reduction in operating expense, and a $0.5 million reduction in interest expense.

Net loss was $9.5 million and $10.6 million for the years ended December 31, 2018, and 2017, respectively.

The decrease of $1.1 million was primarily the result of a $1.5 million reduction in operating expenses and a $0.3 million reduction in interest expense, offset by $0.7 million in higher other expenses.

The increase is a result of higher director fees, and insurance costs.

The Company recorded a gain of $18.3 million on the sale and deconsolidation of Comstock LLC during the year ended December 31, 2020, the entity that owns the Lucerne Mine, resource area and related permits.

There was no comparable prior year transaction.

Other income of $2.6 million for the year ended December 31, 2020 consisted of increases in the fair values of the contingent forward asset of $765,880 and derivative asset related to MCU of $265,127, net gains and changes in fair value of Tonogold securities of $620,537, favorable changes in fair value of make whole obligations and reimbursements related to investments in MCU and Pelen of $496,604, and other income totaling $1.1 million from the sum of interest income, qualified Paycheck Protection Program proceeds, accounts payable settlements, and other items, partially offset by a decrease in the fair value of the Tonogold Note of $642,997.

Other income was $2.4 million for the year ended December 31, 2019, primarily resulting from a $2.2 million gain on termination of an option agreement with Tonogold and a $1.5 million increase in the fair value of Tonogold CPS, partially offset by unfavorable changes in fair value of the MCU make whole obligation of $452,740, preferred stock issuance costs of $432,000, and other net expenses totaling $369,881.

Interest income increased by $0.4 million for the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to interest received on the Tonogold Note.

Interest expense decreased by $0.5 million for the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to lower average debt outstanding, including the early retirement of the Debenture in August 2020, partially offset by a higher interest rate and discounts on the Promissory Notes, and lower interest expense reimbursements.

Net income was $14.9 million for the year ended December 31, 2020, as compared to a net loss of $3.8 million for the years ended December 31, 2019.

The increase of $18.7 million resulted from the gain on sale and deconsolidation of Comstock LLC of $18.3 million and the $0.6 million increase in other income and expense, net described above, partially offset by the $0.2 million increase in total costs and expenses described above.

Liquidity and Capital Resources

The financial statements are prepared on the going concern basis of accounting which assumes the realization of assets and the satisfaction of liabilities in the ordinary course of business.

The Company’s current capital resources include cash and cash equivalents and other net working capital resources, planned investment sales of Tonogold securities, and proceeds from the planned sale of Lucerne mineral properties and non-mining assets.

The consolidated financial statements are prepared on the going concern basis of accounting which assumes the realization of assets and the satisfaction of liabilities in the ordinary course of business.

The Company’s current capital resources include cash and cash equivalents and other net working capital resources, planned sales of Tonogold securities, and proceeds from the planned sale of non-mining assets, primarily the Silver Springs Properties.

The Company has recurring net losses from operations and an accumulated deficit of $221.0 million as of December 31, 2020.

For the year ended December 31, 2019, the Company incurred a net loss of $3.8 million and used $2.3 million of cash in operations.

For the year ended December 31, 2020, the Company generated net income of $14.9 million and used $3.8 million of cash in operating activities.

As of December 31, 2020, the Company had cash and cash equivalents of $2.4 million.

The Company also has long-term debt of $4.9 million that matures in January 2021, for which it does not currently have the ability to repay.

Such condition raises substantial doubt regarding the Company’s ability to continue as a going concern.

The Company intends to finance its operations over the next twelve months through its existing cash, the sale of common stock through its existing equity agreements to issue securities, proceeds from the planned sale of its Lucerne mineral properties, non-mining assets, and Tonogold securities.

These plans are outside of the control of management, and therefore, substantial doubt exists about the Company’s ability to continue as a going concern through 12 months from the issuance date of the financial statements.

On February 18, 2019, the Company filed a new shelf registration statement on Form S-3 (the “S-3 Shelf”), for the sale of up to $50.0 million of the Company’s securities, from time to time, and used $4.5 million of that capacity during 2019, leaving an aggregate unused capacity of $45.5 million as of December 31, 2019.

So long as the aggregate market value of the Company’s voting and non-voting common equity held by non-affiliates is less than $75 million, the aggregate market value of securities sold by or on behalf of the Company pursuant to the S-3 Shelf during the period of 12 calendar months immediately prior to, is limited from being no more than one-third of the aggregate market value of the Company’s non-affiliated voting and non-voting common equity.

On March 15, 2020, these limitations resulted in approximately $2.1 million of unrestricted, available S-3 Shelf capacity.

The Company was late in filing its quarterly report on Form 10-Q for the period ending March 31, 2019.

The report was due to be filed on May 15, 2019, but was not filed until June 20, 2019.

As a result, starting on the date of this 10-K filing, the Company is no longer permitted to issue securities pursuant to the S-3 Shelf (unless the Company files a post-effective amendment on Form S-1 that is declared effective by the SEC) until twelve months and any portion of a month subsequent to the late filing have lapsed (that is, permission to use the S-3 Shelf resumes on July 1, 2020), when the Company will once again be permitted to issue securities pursuant to the S-3 Shelf registration statement, assuming that the Company meets all other requirements of the Form S-3 at that time.

On October 1, 2019, and as amended and restated on October 9, 2019, the Company entered into a new equity purchase agreement (the “Leviston Equity Agreement”) with Leviston Resources LLC (“Leviston”) and filed a prospectus supplement to offer and sell shares of common stock at an aggregate offering price of up to $1.25 million, from time to time, to Leviston with aggregate unused capacity of $0.45 million as of December 31, 2019.

In February 2019, the Company also entered into an equity purchase agreement (the “2019 Equity Agreement”) with the Murray Family Office (“Murray FO”) for the sale of up to $5.0 million in shares of the Company’s common stock from time to time, at the Company’s option, subject to certain restrictions and at a 10% discount to a volume weighted average price.

On September 20, 2019, the Company filed a prospectus that terminated any remaining sales pursuant to the 2019 Equity Agreement after using $1.9 million of its capacity

On September 26, 2019, as amended in November 30, 2019, and December 26, 2019, the Company entered into agreements with SSE to sell two properties in Silver Springs, NV, including 98 acres of industrial land and senior water rights (the “98 acres”) for $6.5 million and 160 acres of commercial land contained with its rights in the membership interests in Downtown Silver Springs, LLC (“DTSS”) for $3.6 million.

As of February 28, 2020, the Company received $0.4 million in escrowed deposits for the purchase of these assets and expects the sales to close during the second quarter of 2020.

Net cash used in operating activities for the year ended December 31, 2019, was $2.3 million as compared to net cash used in operating activities of $4.0 million for the prior year.

The Company's use of cash in 2019, and 2018, was primarily related to general and administrative, exploration, mine claim cost and environmental expenditures.

The decrease resulted from a lower net loss due to lower operating expenses and a higher net source of cash from working capital.

Through December 31, 2020 , the Company had converted 3.9 million of the 6.1 million in Tonogold CPS held by the Company, in exchange for 21,777,778 common shares of Tonogold and received $2.6 million in proceeds from redemption of the remaining CPS, representing 120% of the remaining face value.

The Company also realized approximately $3.2 million in cash proceeds from the sale of 8,645,918 Tonogold common shares at an average price of approximately $0.37 per share.

At December 31, 2020 , the Company holds 13,131,860 Tonogold common shares with an estimated value of $3.9 million, in addition to the $4.5 million face value of the Note, with payment due to the Company on September 20, 2021.

At December 31, 2020, the Company had debt obligations with a face value of $3.6 million with maturities on or before November 1, 2021.

On April 30, 2020, the Company received a Paycheck Protection Program (“PPP”) grant of $0.3 million, as part of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), and the rules promulgated thereunder.

The amounts received were used to fund payroll costs and the Company expects all proceeds received to be forgiven.

The Company intends to fund its operations over the next twelve months from existing cash and cash equivalents, and proceeds from the Offering, planned sales of Tonogold common shares, the repayment of the Tonogold Note and the planned sale of the Silver Springs Properties.

These expected sources of funds are significantly in excess of current debt obligations and cash expected to be used in operating activities.

While the Company has been successful in the past in obtaining the necessary capital to support its operations, including registered equity financings from its existing shelf registration statement, borrowings

and other means, there is no assurance the Company will be able to obtain additional equity capital or other financing, if needed.

However, as a result of the funding sources described above, management believes the Company will have sufficient funds to sustain its operations during the 12 months following the date of issuance of the consolidated financial statements included herein, including financing required for the LiNiCo transactions described below.

On February 15, 2021, the Company filed a current report on Form 8-K regarding an investment in LINICO Corporation (“LiNiCo”) pursuant to the Series A Preferred Stock Purchase Agreement and related transactions.

See Note 22, Subsequent Events, to the consolidated financial statements.

On March 2, 2021, the Company entered into equity purchase agreements to issue and sell 4.0 million shares of common stock at a price of $4.00 per share.

The offering of the shares closed on March 4, 2021, resulting in expected net offering proceeds of $15.0 million.

See Item 1, Financing Events, and Note 22, Subsequent Events, to the consolidated financial statements.

On March 4 2021, the Company repaid $3.2 million, representing all amounts outstanding under the Promissory Notes, including principal, earned original issue discount and accrued interest expense.

See Note 11, Long-Term Debt, and Note 22, Subsequent Events, to the consolidated financial statements.

On March 4, 2021, the Company made an $812,500 payment to Northern Comstock LLC representing, pursuant to the Northern Comstock operating agreement, a one-time acceleration of required capital contributions when the Company receives net cash proceeds from sources other than operations that exceed $6,250,000.

See Item 2, Properties, Northern Comstock LLC, and Note 21, Related Party Transactions, and Note 22, Subsequent Events, to the consolidated financial statements.

Net cash used in operating activities for the year ended December 31, 2020, was $3.8 million as compared to net cash used in operating activities of $2.3 million for the prior year.

The Company's use of cash in 2018, and 2017, was primarily related to general and administrative, exploration, mine claim cost and environmental expenditures.

The decrease in cash used in operations of $2.5 million resulted due to lower operating expenses and a higher net source of cash from working capital.

Net cash provided by investing activities for the year ended December 31, 2019, was $2.6 million, substantially all from $5.9 million of payments on the purchase of Comstock Mining LLC by Tonogold, offset by $2.4 million used for the purchase of properties, $0.8 million for investment in MCU, and $0.3 million for the investment in Sierra Springs Opportunity Fund.

Net cash used in investing activities for the year ended December 31, 2018, was $1.6 million, substantially all from purchases of property.

Net cash provided by investing activities for the year ended December 31, 2017, was $1.0 million, primarily driven by proceeds from the sale of equipment of $1.1 million offset by purchases of property for approximately $0.1 million.

Net cash provided by financing activities for the year ended December 31, 2019, was $0.2 million, primarily from net proceeds from the sale of common stock of $4.9 million, partially offset by principal payments on long term debt of approximately $4.7 million.

Net cash provided by financing activities for the year ended December 31, 2018, was $4.1 million, primarily from net proceeds from the sale of common stock of $4.2 million and $2.0 million from the Tonogold option fee proceeds, offset by principal payments on long term debt of approximately $2.1 million.

Net cash provided by financing activities for the year ended December 31, 2017, was $7.4 million, primarily from net proceeds from the sale of common stock of $7.1 million, proceeds from the Tonogold option fee of $0.2 million, and net proceeds from long term debt refinancing of approximately $0.1 million.

Future operating expenditures above management’s expectations, including exploration and mine development expenditures, or in excess of amounts to be raised from the issuance of equity or new debt facilities, declines in the market value of properties held for sale, or declines in the share price of the Company's common stock, would adversely affect the Company’s results of operations, financial condition and cash flows.

If the Company was unable to obtain any necessary additional funds, the Company could be required to limit or discontinue certain business plans, activities or operations, reduce or delay certain capital expenditures and investments or sell certain assets or businesses.

There can be no assurance that the Company would be able to take any such actions on favorable terms, in a timely manner or at all.

The Company's use of cash in the years ended December 31, 2020 and 2019, was primarily related to general and administrative, exploration, mine claim cost and environmental expenditures.

The 2020 increase in cash used primarily resulted from 2019 decreases in prepaid expenses and increases in accrued expenses.

Net cash provided by investing activities for the year ended December 31, 2020, was $3.2 million, primarily from $2.9 million in proceeds from the sale of Tonogold common shares, $2.6 million in proceeds from redemption of the remaining CPS, representing 120% of the face value, $1.1 million in payments received from Tonogold, and $0.2 million of proceeds from deposits and sale of mining and non-mining assets, partially offset by advances made to SSOF of $1.7 million, investments in and loans to MCU-P of $1.2 million, investments in MCU of $0.4 million, payments on Pelen make-whole liability of $0.2 million, and option payments to purchase the remaining membership interests in Pelen of $0.1 million.

Net cash provided by investing activities for the year ended December 31, 2019, was $2.6 million, primarily from $5.9 million in proceeds from Tonogold for payments toward the purchase of Comstock LLC and $0.3 million in deposits for the sale of the Silver Springs Properties, offset by $2.4 million in property purchases, $0.8 million in deposits made for the investment in MCU and $0.3 million for the investment in SSOF.

Net cash provided by financing activities for the year ended December 31, 2020, was $2.0 million, primarily resulting from net proceeds from the sale of the Company's common stock of $4.2 million and proceeds from issuance of Promissory Notes of $5.5 million, offset by principal payments on long term debt of $7.6 million and common stock issuance costs of $0.1 million.

Net cash provided by financing activities for the year ended December 31, 2019, was $0.2 million, primarily due to net proceeds from the sale of common stock of $4.1 million and issuance of convertible preferred stock of $1.1 million, offset by principal payments on long-term debt of $4.7 million and common stock issuance costs of $0.3 million.

Future operating expenditures above management’s expectations, including exploration and pre-development expenditures, in excess of planned proceeds from sales of Tonogold common shares, the Tonogold Note and the Silver Springs Properties, amounts raised from the issuance of equity under the S-3 Shelf, or declines in the market value of properties held for sale or the share price of the Company's common stock, would adversely affect the Company’s financial condition, results of operations and cash flows.

If the Company was unable to obtain necessary additional funds, this could have an immediate material adverse effect on liquidity and raise substantial doubt about the Company’s ability to continue as a going concern.

In such case, the Company could be required to limit or discontinue certain business plans, activities or operations, reduce or delay certain capital expenditures, or sell certain assets or businesses.

There can be no assurance the Company would be able to take any such actions on favorable terms, in a timely manner, or at all.

Critical Accounting Estimates

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Additionally, changes in accounting estimates could occur in the future from period to period.

Our management has discussed the development and selection of our most critical financial estimates with the audit committee of our Board of Directors.

Our management has discussed the development and selection of our most critical financial estimates with the Audit and Finance Committee of our Board of Directors.

The following paragraphs identify our most critical accounting policies:

Determination of Fair Values

Management determines the fair value of a financial instrument based on the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value is calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

In addition, the fair value of liabilities includes consideration of non-performance risk, including the party’s own credit risk.

Impairment of Mineral Rights and Properties, Plant and Equipment

The Company assesses its mineral rights and properties, plant and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

The Company assesses its mineral rights and properties, plant and equipment for possible impairment whenever events or changes in circumstances indicate the carrying value of the assets may not be recoverable.

Such indicators include changes in the Company’s business plans, changes in precious metal prices and significant downward revisions of estimated mineralization quantities.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis