Comstock Mining (NASDAQ: LODE), Recent Offering Discussed

Comstock Mining (NASDAQ: LODE), Recent Offering Discussed

Comstock Mining (NASDAQ: LODE), Recent Offering Discussed

Gold prices gained 7.1 percent during 2012, the 12th successive year of gains. Comstock Mining Inc. (NASDAQ: LODE), a Nevada based gold and silver mining company, is looking to cash in on the phenomenal rise in the precious metal. In November of 2012, the company announced a successful completion of its PO of 3,692,673 shares of its common stock. Underwriters were Global Hunter Securities, LLC, Aegis Capital Corp., and Moelis & Company LLC. North Square Blue Oak Ltd. was co-manager for the proposed offering. In 2003 LODE began purchasing properties in the Comstock District.  Since then, they have gathered the largest known storehouse of historical and geological data on the region, obtained permits and have built an infrastructure. LODE began production in the region in 2012.

Lately gold prices have been driven by the loose economic policy of the Federal Reserve. This in turn has boosted demand for the precious metal among investors who are seeking assets outside those denominated in the falling U.S. dollar. Gold hit its highest point of 2012 in October reaching $1,800 per ounce. This is below the highs of $1,900 per ounce recorded in 2011.  It is currently trading on the floor for $1683.90, the mid-point of its 52 week range. The U.S. Treasury has roughly 261.5 million ounces of the shiny metal stored in Fort Knox, Kentucky, which at today’s prices is worth $432 billion.

As for Comstock Mining, the company has a market cap of $83.64 million. Shares are trading for $1.92 as of this morning. Net loss for Q3 2012 was $9.0 million compared to $2.0 million for Q3 2011. According to the company, the $7.0 million increase was the result $4.2 million increase in operating expenses. The company is investing a great deal of money in equipment and exploration right now. In November 2012, LODE raised $8.1 million in gross proceeds through a public offering of 3.7 million shares of common stock at a price of $2.19 per share. The company will use the net proceeds for working capital and expanded permitting.

Comstock Mining Inc. has been successful in finding gold and silver in the old Comstock region. Ultimately, success for the company will hinge on the viable amount of gold and silver they can locate and process and that has just begun to happen in the past few months. The bottom line is that some people are more comfortable investing in the precious metal rather than the more risky option of investing in companies that look for it. In any event, this play could yield nice returns in the long-term. It’s definitely a waiting game. 

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  • mrego123

    Gold and silver are still a little weak and I suspect there is some more downside to follow but not much. Ultimately, I think 2013 will be a great year for these precious metals and once they bottom out, LODE will likely follow.

    • entresean

      Well, Gold is a good play, anytime. I see this period as a good entry point.

      • Brian Prescott

        Well said, difficult to see gold losing its status as the best hedge against inflation and poltical instability.

  • Lillie

    The company geologists say there is plenty more shiny stuff in the Comstock. Interesting play.

  • konraad

    Gold and silver do well as long there is some level of uncertainty in the economy. the current situation with the European debt crises, slow down in growth in China plays in the favor of precious metals.