VIRGINA CITY, Nevada – A 6,000-acre consolidator is turning heads on the Comstock Trend.
Comstock Mining (OTC:BB: LODE), a tiny bulletin-board-traded prospector in one of North America’s richest gold and silver trends, is nailing what appears to be silver-gold bonanzas long separated for decades by legal squabbles and corporate shortcomings.
“A bonanza is a grade better than a half-ounce of gold per ton, and right here, at this hole, and that one drill site there, we believe we have them,” senior geologist and Comstock co-author Larry Martin tells me this week. At one drill hole, 200 feet of three-gram-per-tonne 
gold sits some 25 feet below surface of the Nevada desert.
The history of the sprawling Comstock Trend and its volcanic domes includes many a San Francisco, Los Angeles and Nevada fortune. Howard Hughes was here. Mining pioneer John W. Mackay cultivated a $100 million portfolio of wealth from these epithermal low-sulfidation silver and gold deposits of the 1880s-90s.
Mr. Mackay, whose name graces the geology school at the University of Nevada at Reno, mused often about the plums to be found in the scattered ore bodies of the Comstock. Much of the equipment and buildings now owned by Comstock Mining sport a plum hue.
Adolph Sutro of San Francisco made it big here. Abraham Lincoln wanted his nation’s capital at American Flat here were the Yankees to lose their uncivil war with the South. “He figured they could mint a Treasury from the silver alone here,” Comstock Mining CEO and merchant banker Corrado De Gasperis,a Connecticut Yankee, says. George Hearst sparked his treasure chest here with silver.
Comstock Mining is one of more than 130 publicly traded entities to work the Comstock. Its cast of characters includes a Los Angeles property and wireless technology investor, a handful of geologists and engineers with 30-year ties to Virginia City and the surrounding area … and merchant bankers with a history of deep pockets and potent results.
Many of those 130 public prospectors were operating in the 1870s to early 1900s in and around Carson City and Virginia City, no more than 25 miles from Reno, Nevada. Then, “it came down with a crash, starting more or less with the San Francisco Earthquake of 1906,” says Scott Jolcover, a director of Comstock Mining. “But when you look at the Comstock and Silver City systems of minerals, even up to the mid-1960s, you can document about 8.2 million ounces of gold and almost 200 million ounces of silver easy.”
Comstock Mining executives and investors, led by John Winfield of Los Angeles (Intergroup, Santa Fe, hotels, wireless communications and value investing of large proportions), have assembled an almost-6,000-acre spread of land that runs about six miles through and between these historic and possibly fresh bonanzas. (All photos: Thom Calandra.)
Here on site with me are Mr. De Gasperis, Mr. Winfield and a team of geologists and engineers, including Behre Dolbear Group as an advisor, Larry Martin and Steve Russell as geologists, Mike Norred as a planner and famous merchant banker Ken Moelis (not present today) as a financier. Mr. De Gasperis, the CEO, is a longtime metals financier who sprouted from KPMG in Connecticut and has worked with Moelis Group.
The catalysts for little Comstock Mining are several: Fresh investors who likely will take John Winfield and partners’ six or seven years of cash investing in the company and transform it from company debt to … something … else. On the technicals, a May 2010 43-101 report showed gold equivalent of 917,000 ounces across 181 holes. Please see www.Stockhouse.com for all data and news.
Fresh drilling of another 51 holes almost surely will fill in extraordinary gaps between bonanzas and boost the 917,000-ounce number. “This is really a story of so many starts and stops between bonanzas because of lawsuits over 25 acres here and 50 acres there – for years and years, decades,” says Corrado De Gasperis, who helped spearhead a massive reverse split of the shares that received 90 percent shareholder approval. “John Winfield has made the assembly of these parcels, the permitting and the eliminating of the lawsuits his passion.”
I put the Comstock dynamic before CMJ and GNMT Nevada geologist Robert Carrington. Bob of Colombian Mines (TSX: V.CMJ) in Colombia and General Metals (OTC:BB: GNMT) in Nevada already had worked the 
properties around here – many, many years ago. The grizzled Nevada resident and geologist went and visited John Winfield and the Comstock team earlier this year.
“Yeah, I (helped) discover the Billie the Kid and Lucerne deposits when I was president of Jacqueline Gold circa 1989 - 1990 and later helped patent the Billie the Kid claim that Comstock now owns. I know most of the people there and have a real good feeling about John Winfield,” Bob tells me.
To be sure, many USA-trained and Canada-trained geologists were schooled on the Comstock. It is like studying American literature and not getting a dose of Samuel Clemens/Mark Twain, who spent much time in these parts 130 and 140 years ago.
On the financials: concerns about future financings, if they happen, and the effect on the total pool of common shares should not deter investors from a land-accumulation that clearly could control bonanza-grade gold and silver streaks. The numbers here are massive, or so it appears to me. The Comstock Mining team is convinced it will be running 24,000 yearly ounces of gold-equivalent from existing facilities (which require refurbishing, i.e., a crusher, mill, heap leach pit and so on) by 2012 and Mr. De Gasperis thinks even sooner.
If that were to happen, tiny Comstock Mining would go in a league with Allied Nevada and other successful Nevada companies. Tiny Comstock Mining already has used its existing plum-colored mill, crusher and other equipment to produce about 12,000 ounces of gold-equivalent from its Lucerne target.
To be sure, some 19 million shares outstanding at (now) US$1.60 or so come with a vast debt of $29.5 million that soon must be “solved.” Much of that debt is owed to John Winfield in his years-long effort to bring scores of claim holders and property owners to the bargaining table. (Photo: Larry Martin at left and John Winfield at center.)
“We know we can solve the debt and bring the balance sheet to zero debt and the cash we need (as much as $18 million) to bring this operation to fruition,” John Winfield says. “All due respect to our closest miner in these parts, Allied Nevada, but we think we have grades in many of our belts that are four times theirs – and we are doing all oxides to their higher-cost sulfides.”
I intend to purchase LODE shares as soon as I raise some cash. Our Ticker Trax subscribers got the word on LODE earlier this week. I expect the shares to benefit from looming drill data and possible financing solutions to the company’s debt.
NOTES: I am kicking more tires in West Africa – Ghana and Mali, home to Xtra-Gold Resources (OTC:BB: XTGR). Mike Nikiforuk’s African Gold Group (TSX: V.AGG) of Ghana and Mali appears poised to publish robust data in coming weeks and months. Mike tells me, “Very strong results within the oxide profile of the deposit here as we are headed for the multi-million ounce Au category at Kobada, Mali. Plus, in Ghana we are right next to Keegan (KGN).” … North Atlantic Resources of Mali (NAC) also looks engaging. We here at home have more than 120,000 shares of Xtra-Gold Resources (XTGR) of Ghana. … Bellhaven Copper & Gold (TSX: V.BHV) appears poised to publish fresh data from La Mina in Colombia in the next week or so.I own 1.4 million shares of the Colombia and Panama prospector. … Gold-Ore Resources in Sweden (TSX: T.GOZ) says its Bjorkdal gold mine just notched one million ounces of gold produced. I will be on site at the mine next Wednesday and Thursday with a Bellhaven director, Patrick Abraham. The mine opened in 1988 as an open-pit operation and has operated for 20 of the past 22 years. I own 12,000 shares of the company.
THE NOVEL: It’s here, complete and for your reading pleasure: PABLO BY NUMBERS by Thom Calandra. It’s about the world of natural resources … and pain … and joy. Funny, too.
NEW ORLEANS & SF: This autumn I will be making two or three appearances outside of prospect tours. One of them is in New Orleans, where I appear each year at Brien Lundin’s New Orleans Investment Conference. On the conference scene, there are only two this autumn where I am scheduled to present workshops: San Francisco and New Orleans. A third possible is the Oct. 6-8Medellin Metals Trade Fair in Colombia.
If you’d like to join our Stockhouse and Ticker Trax audience at the late-October New Orleans show, please register and pay up at this link: REGISTER FOR NEW ORLEANS. You get a discount on the price at that address. It’s my favorite investment show – along with the longstanding San Francisco Hard Assets conference in November, when I will be presenting a workshop on structural geology – as a reporter, not a geologist.
Ticker Trax™ started in November 2008. The service researches a select group of Planetary Prospects™ with legitimate shots at rising significantly in the span of two years, maybe less and maybe more. It is at www.tickertrax.com.
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HOLDINGS: Thom’s holdings are listed for Stockhouse members at www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. It is public and free to view. He and his family own recently minted gold and silver coins and shares of about 30 public and two private companies.
THOM CALANDRA of Ticker Trax helps his audience find value in a quagmire of investment choices. Thom co-founded CBS MarketWatch and MarketWatch.com. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom pegged $300-ounce gold as a long-term hold in 1999 and in 2000. He has been covering life-sciences and natural resources since 1988. Thom Calandra and Stockhouse produce this and other free reports. Please visit www.Stockhouse.com. Also, see: PABLO BY NUMBERS – The Novel.
Ticker Trax™ is published by Stockhouse Publishing Ltd. Ticker Trax is an information service for subscribers and neither Stockhouse nor Thom Calandra is a broker or an investment advisor. None of the information contained therein constitutes a recommendation by Mr. Calandra or Stockhouse that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Ticker Trax does not purport to tell or suggest the investment securities subscribers or readers should buy or sell for themselves. Subscribers and readers of Ticker Trax should conduct their own research and due diligence and obtain professional advice before making any investment decisions. Ticker Trax will not be liable for any loss or damage caused by a reader’s reliance on information obtained in the reports. Subscribers and readers are solely responsible for their own investment decisions. Opinions expressed in Ticker Trax are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in Ticker Trax should be independently verified. The editor and publisher are not responsible for errors or omissions or responsible for keeping information up to date or for correcting any past information. Ticker Trax does not receive compensation of any kind from any companies that may be mentioned in the report. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed in Ticker Trax. PLEASE DO NOT EMAIL THOM SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH HE CANNOT PROVIDE. Copyright 2010 all rights reserved.