Comstock Sells Legacy Mining Assets to Mackay Precious Metals Inc.

Executive Summary

• Comstock Inc. has executed a Securities Purchase Agreement to sell 100% of its mining, processing, and real estate entities to Mackay Precious Metals Inc. for an aggregate transaction value exceeding $45 million.
• The consideration package includes upfront cash and equity, a retained 1.5% NSR royalty, assumption of all reclamation liabilities, and a $10 million contingent payment triggered by future mine development or a change of control.
• The divestiture marks a strategic pivot for Comstock from a hard rock junior miner to a renewable metals and materials company, expected to yield over $1.5 million in annualized cost savings.

Key Details

• Transaction Type: 100% sale of mineral, mining, processing, and related real estate entities.
• Counterparties: Seller: Comstock Inc. (NYSE: LODE) | Buyer: Mackay Precious Metals Inc. (wholly owned subsidiary of Mackay Gold & Silver Corp.).
• Entities Sold: Comstock Mining LLC, Comstock Processing LLC, Comstock Exploration and Development LLC, and Comstock Real Estate Inc.
• Assets Transferred: All patented and unpatented mining claims, town lots, processing facilities, operating permits, and water rights.
• Aggregate Consideration: Over $45 million total value.
• Upfront Payment: $20 million in cash plus 2 million shares of Mackay Gold & Silver Corp. (TSXV: MACK, OTCQB: MKGSF), valued at over $3.5 million at recent prices.
• Second Tranche: Secured cash payment of $7 million due within 18 months; Mackay may elect to satisfy up to $2 million of this amount through additional MACK shares subject to SPA pricing thresholds.
• Contingent Payment: $10 million payable within seven years if Mackay (i) makes a decision to proceed with mine construction on the properties, or (ii) is sold, merged, or undergoes a change-of-control transaction with aggregate consideration of at least $500 million.
• NSR Royalty: Comstock retains a 1.5% NSR royalty on silver, gold, and all other valuable minerals/products. Mackay holds an option to repurchase the royalty for $3.5 million cash at any time. If the contingent payment does not occur, the royalty buyout price doubles to $7 million.
• Liabilities & Bonds: All reclamation obligations, liabilities, surety bond deposits, and collateral are assumed by the sold entities and remain with them.
• Financial & Operational Impact: Expected to reduce ongoing costs associated with asset maintenance, permits, and environmental compliance by over $1.5 million annually.
• Historical Context: Follows Mackay's lease of Comstock’s Northern Targets (June 2023) and purchase of those properties (December 2024) for $3.85 million. Comstock has received approximately $8 million total from prior lease payments and reimbursed expenses.

Notable Quotes

• Corrado De Gasperis, CEO: “This transaction achieves a critical milestone in our transformation from a hard rock, junior mining company to our growing, global, renewable metals and materials company, that potentially unlocks high value for our shareholders, delivers and reallocates non-dilutive capital to fund that growth, simplifies our business model and reduces costs while retaining real upside through both equity in MACK and potential future NSR royalties.”