Comstock Mining Update March 16, 2015

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Highway 342 through lower Gold Hill (Main Street) was closed to all vehicle traffic on February 27 when the famously fragile Silver Hill mineshaft subsided once again beneath the pavement adjacent to the Lucerne Pit.

What caused this? NDOT project manager Thor Dysson first pointed to the sky and said the rain did it, but later backed off that idea and pointed it the pit instead. “Or it might have been that, I couldn’t say.”

Comstock Mining Inc CEO Corrado De Gasperis had promised investors in a conference call that the company will be profitable “during the first half of 2015”. That seems a bold assertion for an effort that has yielded one goose egg after another since it started up five years ago. It seems to have been based on his expectation of reaching a target ore body beneath the highway called The Chute Zone, big enough and rich enough to put the company temporarily in the black, but to the east of the roadway and thus out of reach.

The terms of the Special Use Permit issued to Comstock Mining Inc by Storey County Commission require a plan of operation be presented for any mining work undertaken. The company has never presented such plan and Storey County insists that the SUP application is a de facto work plan and they would deal with the details as they came up.

But along with no plan there was also no oversight, and when the road collapsed we were sucker-punched. It knocked us silly.

It created a huge hubbub on the Comstock of course — the road carries about 40% of the traffic into Virginia City and is the historic path of the earliest pioneers up Gold Canyon to the great discovery of 1859. All these cars, trucks and motorcycles are now shunted onto the Truck Route, a twisty 80-year-old secondary road with blind curves and sheer drops, designed for the sparse, slow-moving heavy truck traffic of the 1930s. It is incredibly inconvenient, annoying, even dangerous, and quite uninviting to visitors.

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Because this directly affects the merchants who line Virginia City’s main boulevard (including two of the three Commissioners), the road closing has generated an angry roar that raised the hair of public servants in Virginia City and Carson City. The motels south of the ‘Road Closed’ signs get no business now and the communities of Gold Hill and Silver City have been bypassed and separated from one another for the first time ever. In Silver City, Doodads is toast.

We were still woozy from the shock when we were invited to tour the damaged area. Our public servants, wearing stern expressions — Marshall McBride even wore a hard hat — were buoyed by the citizens demanding ‘Road First, Then Mine’. They vowed to have the road restored to traffic as soon as possible. NDOT and CMI agreed, and everyone went home.

The Storey County Commission opened its meeting of March 3 with a roundelay of jovial self-congratulation by representatives of NDOT, Storey County and CMI and then approved the plan presented: a temporary bypass to be built by early June and the permanent road then built on firm footing east of the subsidence. The telephone company scheduled the relocation of its poles and the Commissioners reaffirmed that the work would begin asap.

So we relaxed a little. And while we argued about the best and quickest way to return the road, down at the bottom of the pit CMI was preparing to mine The Chute Zone.

NDEP has already tested the dirt from the area that would be disturbed and okayed its transfer to the heap leach pads on American Flat. With the road no longer blocking the way, the back door of the vault has been pried open. The treasure is now within reach!

But maybe too late.

On Tuesday March 10 I notified the Storey County Sheriff that a crime had been committed in Gold Hill.

NRS 405.230, states:
“1. Any person who, in any manner, obstructs any road, street or alley, or in any manner damages it or prevents travel thereon . . . is guilty of a public offense, as prescribed in NRS 193.155.”

Highway 342 has been appreciably damaged, and travel has been prevented for many months to come. The value of the loss ($5,000 or more) makes it a Class C Felony.

Two days later Gayle Sherman of Silver City filed a formal complaint with the federal Mining Safety & Health Administration, which is responsible for seeing to the integrity of the pit (the Mining Safety and Training is responsible for ensuring the safety of employees). As no record of any engineer’s report on the pit or its benching was found in the file, a search has been instituted to determine if such a document exists.

And on Friday, Larry Wahrenbrock of Silver City made a complaint to the state Mining Accountability and Oversight Commission in Carson City. “The blasting and removal of massive quantities of earth immediately adjacent to Hwy 342 for a distance of more than a mile would naturally, and obviously, weaken an already substandard roadway. The deliberate intersection of historic mine workings known to be unstable only emphasizes the misguided decision by CMI to conduct their pit mining in such a fashion.”

On Saturday rumors were floating that CMI, with its first profit literally within reach, had finally run out of money and would shut down its mining operations.

Two CMI shareholders have submitted a request for clarification to CMI CEO Corrado De Gasperis, identifying a number of statements in the SEC filings which may be violations.  They are allowing a response before moving forward.

But enough about CMI’s mining operations. How’s the ‘hospitality’ department doing?

Not so well. We hear ever more distressing stories from the Gold Hill Hotel. During the rain storm that was cited as the supposed cause of the highway collapse downcanyon, the kitchen ceiling gave way, bringing the rain inside and a pleasant evening to an end.

Newly ensconced chef Richard Oates departed again, returning to the CMI-owned coffee shop on north C Street in Virginia City and leaving the upcoming dinner reservations to be handled by the maintenance man as chef/waiter and the hotel clerk as waitress/bartender. The hotel dining room has now reopened under a repaired roof and its old Crown Point Restaurant name, operated by a capable kitchen crew from the Palace Cafe on Virginia City’s C Street.

The hotel has never made a profit since CMI acquired it either. Like mining, it appears to be a business the company’s principals don’t seem to understand. I think it’s fair to say that just now the Gold Hill Hotel side of things is doing poorly, but better than the mine.

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1 COMMENT

  1. One thing you didn’t mention, that I feel should be stated in every report now, is that when CMI first came on the scene, the residents & property owners in Gold Hill & Silver City were roundly put down by citizens & property owners in Virginia City, for not realizing that when they moved into Silver City & Gold Hill, they were potentially living in a mining area. They were criticized for not realizing this & told basically that it was just TOO BAD for them that they lived in an area that was once mined & was going to be mined again. TOO BAD, that it had been over a 100 years since any major mining was done in Silver City or Gold Hill. Virginia City pretty much told those two towns to LIKE IT, or LUMP IT! But whatever, QUIT WHINING!!! That’s why I am so glad that Gold Hill & Silver City are having a laugh now at Virginia City’s expense. Now, that their beloved tourism has taken such a big hit, THEY are the ones crying FOUL – NOT FAIR! I’d like to know how many people stood up in the commissioners meeting & said, “Too bad your little road fell in. Didn’t you know that mining is KING in Nevada & your quality of life or business means SQUAT when it comes to CMI & allowing them to do anything they want, because after all, they are MINING!!” No, no one did that, not even the County Commissioners who practically rolled out a red carpet for CMI, & caved to their every wish. Hey, if you’re angry about what has happened with this road, know what your best recourse is? RECALL the County Commissioners! Unless you do that, they’re going to continue to sell your quality of life down the river to the highest bidder!

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