A March 4 CMI announcement about the quest for further investors
CMI press release dated March 11 puts 2013 net loss at $21.3 million
The [un-annotated] transcript of De Gasperis’ conference call about the Q4 filing with the SEC
FOLLOWING is a transcript of Sam Shad’s conversation with Comstock Mining Inc. CEO Corrado De Gasperis [annotated by Gold Hill resident David Toll] during “Nevada Newsmakers” on KRNV-TV, Reno’s Channel 4, on Monday, February 17, 2014.
SAM SHAD: We welcome back to the program Corrado De Gasperis. He’s the president and CEO of Comstock Mining. Glad to have you back on the program.
[Corrado is Sam’s self-described ‘close personal friend’.]
CORRADO DE GASPERIS: Glad to be here. Appreciate it.
SAM SHAD: We’ve followed the path of Comstock Mining as you’ve been expanding up on the Comstock. To read the latest press release from you guys, “Comstock Mining strategically expands properties and receives breakthrough zoning changes.” Explain.
[Sam pulled this softball from a CMI press release]
CORRADO DE GASPERIS: Sure. On the first point, we have acquired over 300 acres of private lands that are fully adjacent to our processing facilities. Last Thanksgiving we got a landmark permit that allowed us to quadruple our permitted capacity, and now we have the lands to allow the operation to continue to expand beyond that.
[His view ruined, peace and quiet a thing of the past, the Candy Man was persuaded to sell. Allanders are hanging tough.]
We actually finished our first full year of production in 2013, exceeding our revenue guidance, which was relatively modest but still very fun to deliver on, and then we went down into Lyon County and asked for some zoning changes, and it required a master plan change as well, which turned out to be quite controversial.
[The zoning change would allow open pit mining within and adjacent to Silver City, a terrible imposition of heavy industry in a quiet residential town.]
SAM SHAD: Just give an example.
CORRADO DE GASPERIS: Um …
[De Gasperis evinces a rare moment of indecision as he struggles to paint the town’s destruction as a positive good.]
SAM SHAD: You guys were actually turned down by the Planning Commission initially.
[Sam helps his friend out.]
CORRADO DE GASPERIS: We were turned down by the Planning Commission. I think that we didn’t do a very good job articulating to the Planning Commission, because that group of people are outstanding. But it was very disappointing.
[Here Corrado exhibits his rare talent for simultaneously blowing smoke and blinking back tears.]
And then on January 2nd, so the drama of New Year’s and early morning meeting, we were able to get unanimous approval on the zoning change. And I would say a courageous hearing. The chair allowed for all comment, from all sides. There was deep deliberation amongst all Commissioners, and I think that responsible business, the opportunity for responsible planning and economic development, that’s married with community development, won the day.
[Corrado skips lightly over the top of the hurried New Year’s Day meeting with two Lyon County Commissioners which led to the Board’s vote. Any ‘deep deliberation’ occurred long before the meeting on the 2nd, and ‘responsible planning’ was set aside: the Planning Commission had recommended denial.]
Frankly, I think that a lot of the opposition was based on uncertainty and fear, and now we’re working very closely for a community plan that would preempt any real development, which is the right way to do it.
[It’s hard to grasp his meaning about “preempt[ing] any real development”, but he is correct about uncertainty and fear, which is rife here after three years of dealing with CMI.]
SAM SHAD: Preempt any development where?
CORRADO DE GASPERIS: In Lyon County. In other words, we now are zoned so that the company can invest millions to assess a plan. So whereas a lot of the opposition was saying we don’t want X, or we don’t want Y, what we were saying [was] we just want to be zoned to assess A, B, and C.
[The company did not need these changes in order to assess its prospects to mine. It can drill on private ground in Lyon County without a permit. Second, the change allows a second spectre to emerge, in the form of future residential real estate development under the command of John V. Winfield.]
So an ideal is that we work together with the community, invest the prerequisite sums to determine what the possibilities are. And we’d like them to be mining. We believe that they could be surface mining, we believe it could be underground mining, but our company vision goes beyond the mining. So we’re looking at rural residential developments. We’re looking at logical expansions of the existing community in an appropriate pace.
[Surface mining has been the principal issue since CMI announced its plans. Nowhere is mentioned the opposition of the overwhelming majority in Silver City, and the focus shifts to residential developments. Hmmmm.]
But I think maybe some of the misunderstanding was that those plans were in place and ready to go, when in fact the zoning enabled the company to invest properly in those plans.
[BS as pointed out above. Fact: the door has been opened for exploitation. This is the decision the Court has been asked to reverse.]
SAM SHAD: So would that be something Comstock would do itself, or would you bring in outside developers, for example, residential communities?
CORRADO DE GASPERIS: Yes, so we would lead with the community, but I think there are two or three major points. We would like to do more exploration drilling. That would tell us what the mineral resources are and the types of minings that were possible. We then, to your point, would bring in outside engineers to help assess that.
[CMI can drill without permission, and has already done so. This is a smoke-screen to mask the reversal of precedent and to help position CMI as “lead[ing] with the community”.]
But further to your point, I think we’d like to bring in, I think the county and I think the community would like to bring in third-party facilitators to ensure that the process is thorough. Then we could compile a community plan which would complement community development, quality of life, which is paramount in our common goals, and some aspect of responsible mining and post-mining uses, and those uses would be residential development.
[Here it is finally stated baldly: this is sooner or later about real estate development. Turn the quiet little town into an industrial hell to drive real estate values down and pave the way for . . . whatever John V. Winfield wants paved. No such post-mining development has ever occurred in Nevada, if it has ever occurred anywhere in the world.]
In fact, ultimately what we asked for was a down-zoning. You know, we were literally zoned to build hundreds and hundreds of homes, which anyone who had driven up the Comstock highway, driven past those historic mills, would shudder at the notion. Now it would be something like a dozen, you know, that would be wonderfully complementary to the existing location.
[He’s right, anyone would shudder at the notion, which is surely why he made it up. Without infrastructure — water or sewer — foreseeably available on the necessary scale, and the soils and slopes as they exist on the property, the development potential under any zoning would be significantly reduced. The idea that residential development would be “wonderfully complementary” is questionable, to put it mildly]
All this is a future vision, not current fact, right. But what the Commissioners did, I think is give the county the possibility for jobs, the possibility for community development, but also the immediate investment in those possibilities. So there will be real economics tomorrow, you know, associated with all of this, for hopefully ultimately something very substantial.
[Exploration drilling will most likely be done as in the past by a contractor from out of the area, so there is no “investment” in the typical sense of the word and no real economic benefit to the county except for what the crew spends while it’s here. No economic assessment has been made by the County and any fact-based analysis will recognize “hopefully ultimately something very substantial” for what it is: more smoke and thinning at that.]
SAM SHAD: Okay, and where would that money be invested, that is going to be invested tomorrow?
CORRADO DE GASPERIS: That would be in Lyon County, in the Comstock district as a whole. So we will be looking at plans for mining. We will be looking at plans for developing, but we have always used local labor in our case, and local advisors. And when I say local it’s not just Lyon County and Storey County. It does span from Carson to Reno, in terms of the region.
[More fact-free blah blah blah as Carson City and Reno are dragged into the arena. He can’t show all that many jobs, even temp jobs, going to locals on the Comstock.]
SAM SHAD: Right, the population base is there. Let’s take a break…..
SAM SHAD: So obviously to anybody who has been following this story, there has been a small but very vocal opposition to what you’re doing on the Comstock in Storey County and now spreading into Lyon County.
[Since John V. Winfield described us to investors as ” a handful of loudmouth screwballs” our description as a “small but very vocal opposition” is quite an improvement.]
In the past when there has been, for example, casino development, when the Peppermill expanded, I’ll use them as an example, there was a movie theater complex next to the Peppermill. They needed that space for parking, so they said to the movie theater company, Where would you like the movie theaters to be? They picked them up, moved them over into another area. They had brand-new facilities, and the Peppermill got their parking. That’s happened in lots of different cases in northern and southern Nevada.
[Be careful Sam, you’re pulling your pal’s covers here. The residents have been offered nothing by CMI other than disrespect, lies and insults. No buyouts except at deeply discounted prices with a token downpayment and the balance in common stock. But to be fair, CMI hasn’t got much money of its own and seems to have run through more millions of stockholder money in the futile effort to show a profit.]
Have you tried to reach out to the opposition to say to them, This is what we can do for you to, you know, we are going to continue operating as a mine, that’s obvious, and that’s not going to stop. Are there ways for you to mitigate that protest?
CORRADO DE GASPERIS: I think the answer is yes. We have reached out, and we are engaged.
[You are a party to a Complaint filed in District Court which states that your employment of Vida Keller’s husband and their company, and donating the unheard of sum of $17,500 to Bob Hastings amounts to undue influence.]
And that engagement ironically has been growing since the zoning change. I think that the engagement has been driving towards a common goal, and our common goal is to improve and sustain the quality of life.
[That is not the common goal. There is no common goal. CMI’s goal is to pit mine Silver City. Silver City’s goal is to prevent it.]
So that’s somewhat ambiguous, right? What we haven’t done and what we don’t believe is that there will be displacement, that there will be disruption to the point where people wouldn’t want to live there. Now, having said that, philosophically, someone might not ever want to live within a certain proximity of an operation like that. But we’re looking to fully mitigate those things, and it’s our hope that a joint plan, a joint community plan, wouldn’t require, wouldn’t drive, I wouldn’t think, people to leave.
[ More bafflegab. People have already left. The lady who lived in Ralph and Millie Pitsor’s old place on Main Street, downhill from Ray’s Tahoe Beer House, accepted a lowball offer against her will because she had a terminal illness and wanted to die among her family back home. Theo McCormick, having resigned from the Lyon County School Board over this issue, has bought a house in Carson City and will no longer reside in Lyon County. There are numerous incidents of interference in real estate sales by CMI and its minions.]
So that is our ultimate hope. It is an ideal, but it is a practical one.
SAM SHAD: Let’s talk about the historical aspects of what your company is doing. You bought the Gold Hill Hotel, and I don’t want to say refurbished, because ….
CORRADO DE GASPERIS: … it’s historic …
SAM SHAD: …. because it’s a historic hotel, but it’s in a lot better shape than probably when you took it over. You run a gourmet restaurant out of there. You are also involved with Ron James, the historical preservation officer. Tell us a little bit about the historical side.
CORRADO DE GASPERIS: Thank you for that. To segue that, one of the things that occurred in the zoning change was that there were a series of historical mill buildings on some of the property we were looking to rezone, and the Lyon County Commissioners asked if we would exclude those from the zone request to ensure their preservation. We immediately said we would do that, and we have done a lot in restoring those buildings already.
[Blah blah blah]
To your point, the Gold Hill, which is a landmark, a crown jewel of the Comstock, we’ve refurbished the great room. We restored an old 1890 pipe organ, which works. We opened up the great fireplace, and we’re getting a lot more visitation. The dining is very fine.
[I don’t visit the hotel any longer, even with Bill Fain still holding court on the porch when the weather is good. We’re still friends I hope, but I can’t join him there and so I depend on folks who do for updates. That’s how I learned that the new furniture for this showplace, this “crown jewel”, came from Crate & Barrel.]
But around that we’ve established a new foundation, the Comstock Foundation for History and Culture, and Ron James is the executive director. And we’re just completing our first full restoration, on one of the Yellow Jacket Mine structures, one of the joist and hoist workings, which is remarkable.
[I believe Corrado is referring to the project that Lyon County Commissioner Vida Keller’s husband is carrying out for CMI. Given the fact that their business license had lapsed, and they were $8,000 behind in property taxes, Vida might have felt it was a good idea to back CMI’s underhanded play and help override the Planning Commission by presenting a counterfeit “compromise”.]
This holiday season we actually lit up the entire New York headframe with lights that people are raving about. I think there is an energy that’s coming with this historical restoration. It’s foundational. The magnitude, though, is great. We feel like we’re just getting started. The mine has committed funds directly from a royalty, but we like to think of that as seed dollars, hundreds and hundreds of thousands, maybe millions, that would only be the beginning of raising much more money to go to the Gold Hill area, the Silver City area, ultimately Virginia City as well.
[CMI put up strings of cheap Chinese lights on several buildings they own or control in the canyon. Some people raved, other people laughed. And how’s this for pie in the sky? “. . . seed dollars, hundreds and hundreds of thousands, maybe millions. . . .” On the Big Rock Candy Mountain?]
SAM SHAD: I was going to say, Virginia City is still bouncing along. I worked with them. I should give full disclosure. For many years I helped them with their advertising and marketing. But it seems they have survived the recession and there are a lot of events that are helping them to thrive.
CORRADO DE GASPERIS: Tremendous. They are doing an incredible job with new events. One of the things the foundation and the tourist commission have done together is create a geocaching exercise where people will come and look for geological caches to uncover a treasure secret of the Comstock. That will bring visitation. They’re doing a Comstock mining, not a Comstock Mining Inc., but a Comstock mining festival, where we understand many mines are going to come and compete against each other. So the work that Virginia City tourism, Deny Dotson and the group, are doing is actually remarkable. And they are fighting a negative trend. Although it does seem like the economy is turning and coming up, visitation is not tracking that. It seems to me that their marketing efforts are what’s creating the attraction, and we like to be a part of that.
[Here he deftly blows a puff of smoke toward Deny Dotson while painting a gloomy picture for Virginia City.]
SAM SHAD: Let’s turn to legislative issues, and that would be taking the mining tax out of the Constitution, with about a minute left here. Your thoughts on that.
CORRADO DE GASPERIS: I think it’s ill-conceived. I’ll parlay that into a quick point. You know, Nevada is pro-business. Nevada from my experience is one of the most wonderful places to be to work. But when you peel that onion back, the regulation, some of the hostility in the Legislature, the indecisiveness alone has massively reduced capital flows to the state. I’ve raised over a hundred million dollars in the last three years, and the question keeps coming up about all this uncertainty. So I think we need to be more decisive.
[Note and remember this, if nothing else: despite Mr. De Gasperis’ golden promises, which he has been making for some years now while raising “over a hundred million dollars”, CMI has yet to make its first dime of profit; $100,000,000 in, nothing out. We await the release of the year end SEC filing with growing suspense. Will there be another goose egg? CMI just arranged for a $5 million line of credit, i.e. loan, perhaps necessary to meet obligations beyond what revenues will cover. The report should clarify the situation.]
But I do think these projects require massive capital investment. They’re sustainable infrastructural investments. And just looking at the revenue line, or the profit line, which in fact have been volatile, is not the right sustainable solution. If we need a tax, then let’s come up with the smarter sustainable things and not just target something that isn’t that sound to begin with.
[Translation: Don’t tax the money we make.]
SAM SHAD: Okay, that’s where we’ve got to leave it. Nice to have you on, sir. Continued good luck.
CORRADO DE GASPERIS: Thank you. Appreciate it.
SAM SHAD: We’ll be back here on Nevada Newsmakers after this timeout.