Zach Spencer: Corrado, please provide us with an update on the Sierra Springs Opportunity Fund.
Corrado De Gasperis: Oh, surely. So Sierra Springs has had some great activity over the last few months. I alluded to it earlier on the call, but Microsoft acquired a major piece of property right across the street from the entire Sierra Springs Opportunity Fund land position. They then announced even further investments in Northern Nevada right up the road from that investment in Silver Springs. Tesla announced $3.6 billion investment, including the production of electric semi trucks right here in Northern Nevada, just like — just when it started to seem like Texas was getting the substantial majority of their plant expansions, there was a strong about phase, where they announced not only these semi trucks, but also a new battery plant right next to and integrated with the existing battery plant.
So because of those things, the activity and the interest in Silver Springs has gone up dramatically. I mean, I think, the Microsoft investment was almost like the Tesla effect of eight years ago, where people now see that blue chip companies that have been pouring into Northern Nevada for the last 10 years are expanding into firmly and expanding in to Silver Springs. So we are ecstatic about that. I have at least a handful of investors that are not only looking to invest in Silver Springs but actually looking to come in and acquire a property, the way that Microsoft did from us. So we’re — the real estate market has gone through a bump. I got punched in the nose, frankly, with the Fed rate increases, cap rates, have gone up, valuations have come down.
And so that slowed a bit of the process, but it has not slowed the quantity of activity and the quantity of interest coming in. So from my perspective, had we not moved into a sort of a down real estate cycle, we would have been done. It’s not an excuse. It’s the reality that we’re facing. Yet we still here see repeated and increased interest of inflow of businesses into this area, I mean, almost unbelievable levels. And so again, I just think it’s a matter of time before we close that. We’re looking at a minimum cash proceeds to Comstock of $15 million with the potential of it being up to $20 million. So, we’re very excited about getting that done and supplementing to the now cash position we have from closing the 2500 Peru.
Zach Spencer: Corrado, what is the estimated value for LODE’s position in Green Lion? And can you provide an update on Green Lion?
Corrado De Gasperis: Well, I said it a little bit less specifically earlier at the level that they just did their recent secondary offering, it would put our existing share position at $20 million, okay? It’s not a public company, so we don’t have any kind of immediate way to monetize that. But if there is an interest to doing that, we certainly would be open to it. For us, what is strategic about Green Lion is the contractual relationship and the access that we already have at very, very founding level prices for their system, that’s intact. That’s not changing. The investment — frankly, the investment was done to enable that contract. The investment was done to get a favored nation position on the technology with that being in place, the investment is discretionary. So, it certainly could be one of the assets that we monetize
Zach Spencer: Corrado, what is Comstock’s ownership stake in GenMat and remaining financial obligations?
Corrado De Gasperis: Yes. So, good question. So, we had committed originally up to $50 million up to 50%, okay? That’s the simplest way to think about our commitment. It was phased with three major components. The first component was a $15 million commitment requiring GenMat to achieve certain objectives. They’re well on their way to achieving those objectives. And we have committed in cash to-date, just under $9 million of those $15 million, okay? So, basically, if we fulfill the full $50 million, we would own about 50% of GenMat, right? GenMat is now starting to get, as you probably wouldn’t be surprised to hear, interest from venture capitalists and many other sources of capital. We think there’s positives to that kind of situation.
Right now, we’re the only investor. We’re the only funder. We have three of the seven Board seats. I chaired the Board and our relationship with that incredible management team and that incredible multidisciplinary science team is at the highest level. So, where do we end up? Look, we’re going to get to Phase 1. We’re going to fund $50 million. We’re going to see what’s commercializing, what the values look like? We think they’re going to be extraordinary, and then we’ll make forward decisions from there, right? So where do we end up with GenMat, somewhere between 30% and 50%, depending on how far we go with our capital resources, we have demands on our capital, too, right? And the Fuels business is really ready to fly. So it’s a good situation that we’re in.
I mean, I can’t think of a better situation relative to the businesses and capital allocation decisions that we have in front of us.
Zach Spencer: Pivoting back to mining, what is the lead up to the preliminary economic assessment for property that is drilling, et cetera?
Corrado De Gasperis: Great. Yes, yes. Look, we have — there’s really three major levels to these technical reports. First level, that’s meaningful, is resource estimate. We have a resource estimate for Dayton. We have a resource estimate for Lucerne. The next level is to do these preliminary or pre-feasibility assessments. What does it entail? It entails some engineering. It entails some analysis of the permitting. It entails analysis of the cost preliminary, because you haven’t engineered a full mine plan, but you’ve engineered economic shelves, you’ve engineered certain concepts, you’ve looked at certain processing costs. Well, now let’s reflect on what I just said relative to Comstock. Wow, we already have our permits. We already have operated the Lucerne mine for over four years.
We have a very strong view of what those preliminary economic processing costs, capital costs, et cetera, would be. So we believe that we can now commit to applying all of that existing knowledge and a little bit more work and a little bit more engineering to both the Lucerne and Dayton property, and update — publish updated technical reports that represent pre-feasibility studies. We’ve already planned this out with our lead engineering and geological team, and it is fully part of our plan to achieve that level this year. Once that level is achieved, okay, we could then go directly to a full feasibility, full feasibility. Full feasibility is what gets you full engineering, full economic analysis, full net present values of what we think that asset could deliver and proven and probable reserves.
However, there’s a decision point there, right? Do we believe that we’ve quantified the magnitude of the resource that we want to move into proven and probable or do we want to think about growing the magnitude of that resource and then going into proving problems? So said a different way, we will get the pre-feasibility this year, right, then we’ll look at can we expand that footprint or move it to full feasibility. Here is the wildcard that we’re very excited about. The analytics the probability-based assessment, the value that GenMat’s team can add when coupled with our team and all of the existing data that we have today, can enhance dramatically not only the resource, but the prospect of expanding the resource much more efficiently. So, look, customer GenMat could be largest mining companies in the world.
They can say, hey, we want you to scan our properties and we want you to analyze those data. But they’ll also likely say, and it’s what we’re hearing them say, we have a lot of data already. Can we use your AI engine to analyze the data that we already have. Can it help us see things that we can’t see. And in some cases, it’s just the sheer magnitude of data. I mean, you literally could put a small team of geologists on something that might take them three or four years just to sift through. The AI will do it in minutes. This is where the revolution is coming in mining. So the good news, we’re progressing no matter what, and we’re likely going to enhance dramatically with what GenMat’s already creating for the global mineral exploration industry, but we’re at the front of the line with using the technology.