Comstock Mining Update — August 22, 2014

Lucerne Pit, Gold Hill Nevada
Lucerne Pit, Gold Hill

At its meeting of August 21 the Storey County Planning Commission voted to recommend approval of Comstock Mining Inc’s request for amendments to its SUP. The issue will come before County Commissioners McBride, Gilman and Sjolvangen who are poised to approve it. That will mark the end of Gold Hill as a living community.

Here is a recap of recent activity.

Storey County
1. Despite his prediction in a conference call, the second quarter of 2014 was not profitable for Comstock Mining Inc. Instead, the company posted a $3.39 million loss. Yet another zero in unbroken row of goose eggs in the profits column suggests a bleak future.

2. With capital still draining out faster than it can be replenished, CMI applied to Storey County for an amendment to the existing Special Use permits which would basically exempt the company from county oversight as it tears up the countryside east of the highway. The request was continued three times by the Storey County Planning Commission until it was recommended for approval at the August 21 meeting.

Corrado De Gasperis complains that “evil intent” by others “orchestrated” events to shut CMI down.

3. Comstock Residents Association had cautioned against rushing this amendment request without due diligence. The application was incomplete according to county ordinance, and should have been returned as such. Among its many deficiencies, the application does not include a mining plan of operation as required, it does not address the safety of the Silver City water supply, the process of moving the highway that is a lifeline for Gold Hill and Virginia City, or how the ore will get from the east side of the canyon to the west side.

4. The request was made in the name of a different entity (Comstock Mining LLC) than the SUP holder (Comstock Mining Inc). What could be the purpose of creating a holding company for the mine, transferring title to the mine and the SUP to it, and then separating it from CMI?

There has been a line of speculation that the relationship between the mining company (CMI) and Northern Comstock LLC, the consortium of claimholders leasing their land, was carefully crafted to facilitate transfer of assets out of CMI. According to the agreement, CMI pays Northern Comstock LLC nearly $900,000 a year to operate on their claims. Northern Comstock LLC is managed by John V. Winfield, who is also Chairman of the Board of CMI.

So when it becomes clear that the market will not bear another public stock offering, John V. Winfield could fail to make CMI’s payment. Then the same John V. Winfield could foreclose on behalf on Northern Comstock LLC and seize CMI’s assets.

5. But wait, there’s more. With Comstock Mining LLC (John V. Winfield) now holding title to CMI’s mining properties and the about-to-be-granted SUP, then CMI can collapse without a trace — except for the disappointed shareholders and employees, of course — leaving Comstock Mining LLC with the mine (SUP intact), and Northern Comstock LLC with everything else.

If such a thing were to happen and they were left holding an empty bag, the shareholders would probably raise a stink, but who would care? Storey County has turned a blind eye to the company’s failures and misdeeds — surely it will turn a blind nose to the stink as well.

At least one knowledgeable seer predicts that CMI will dare one more public offering before doing the Dipsy-Doodle and dying under the weight of debt, while the assets purchased with the stockholders money move over to the LLCs.

Question: Having granted the company everything it has asked for without regard to consequences, will Storey County be a co-defendant when the stockholders sue?

Lyon County
1. A Complaint was filed by CRA attorney John Marshall asserting that the Lyon County Commission flouted both procedure and precedent at the January 2 meeting and CMI exerted undue influence over Commissioners Hastings and Keller. It has been placed before Senior Judge Bob Estes, a well-respected retired judge from the District Court at Yerington. He has called for an oral presentation by all parties next month.

2. A complaint was filed before the state ethics committee over Vida Keller’s role in the betrayal of Silver City. She engineered her “compromise” in the company’s favor at private meetings, first with Lyon County Manager Jeff Page and Commissioner Joe Mortensen, and later the same day with CMI CEO Corrado De Gasperis. Keller’s financial difficulties — property taxes in arrears, business licenses unpaid — have been reported in the press. The Complaint alleges that Keller’s business relationship with CMI (she and her husband Scott operate a business with a contract from the company) renders her unable to be impartial in the execution of her duties.

3. After more than three years of ignoring their concerns, CMI has engaged with Silver City residents, presumably in hopes of persuading them to accept the noise, toxic dust and disruption of open pit mining. On April 29 the company offered to pay for blood testing and soil analysis for any property owner in Silver City who requested it.

In July CRA board member Joe McCarthy sent a letter to CMI accepting the company’s “gracious offer”. He added: “CRA believes that best practices include securing this complex, yet essential empirical data with the participation of an independent, private third party with appropriate credentials and experience, selected by CRA. Doing so would improve the community acceptance of the results. In that spirit, our board agrees to accept your company’s generous offer of support. CRA is most capable of participating in the needed document review and subsequent testing through independent consultants working directly for CRA and the residents of Gold Hill and Silver City.”

The Reno newspapers picked up the story and quoted De Gasperis: “We’re just doing this to be good citizens, just doing it to give people peace of mind, like I would for my mother.” It is heart-warming to read that Mr. De Gasperis wants to be a good son, but it doesn’t erase the many instances of the company’s deceit that have led to the wide-spread distrust. A recent example: describing its quarter-million dollar fine from NDEP as a “Special Project” at public meetings.

CMI will doubtless play up this green light from Storey County as its Open Sesame to a new Big Bonanza, thus creating a favorable atmosphere for its next stock offering, and for its demise.


  1. Every property owner/resident in Silver City should immediately take advantage of the offered blood testing and soil analysis! Everyone who has ever visited a Silver City resident should, also, demand a blood test!

    These aforementioned steps should help CMIs bottom line! These tests are not cheap!

  2. The fact that CMI has offered free blood and soil tests to Silver City residents implies a serious legal concern over a potential toxic impact to both humans, Silver City soil and water ecology. Do the city residents and officials feel they’ve been BAMBOOZLED? They should. It portends a bold and unprecedented cover-up. Does CMI truly believe they have a legal defense that Silver City residents knew and understood the possible toxic consequences of CMI’s mining operations. This is all very scary.


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