Good afternoon, and thank you for joining Comstock Inc.'s Second Quarter 2025 Earnings Call and Business Update. I'm Zach Spencer, Director of External Relations. Today is Thursday, August 14, 2025. We are streaming live, and this session is being recorded. A recording will be posted shortly after we adjourn in the Investor Relations section of our website. Today, we filed our Form 10-Q for the quarter ended June 30, 2025, and issued a press release summarizing second quarter results. Both documents are available on our website. As a reminder, Comstock is listed on NYSE American with the ticker load LODE. Joining me today is Corrado De Gasperis, Comstock's Executive Chairman and Chief Executive Officer; and Judd Merrill, Comstock's Chief Financial Officer. We received more than 40 questions in advance of the call. If you have additional questions during the call, please use the Zoom Q&A window, and we will address as many as time allows. Today's discussion will include forward-looking statements. Actual results may differ materially due to risks and uncertainties detailed in our SEC filings. Full risk disclosures can be found in our filings on the Investor Relations page and on the SEC website. With that, it is my pleasure to introduce our Executive Chairman and Chief Executive Officer, Corrado De Gasperis. Corrado, you may begin.
Thank you, Zach, and welcome, Judd, Zach, and all the investors and stakeholders interested in Comstock for the second quarter results and update. I will be using some slides, so for those watching the webcast, it should be very effective. For those on the dial-in, I’ll do my best to describe everything clearly. The update is outstanding, and there’s a significant focus on our metals following Bioleum's separation in May. In our January shareholder letter, we stated that our main objective through 2025 involves transformational transactions to establish a public Nevada-based metals company and an Oklahoma-based oil and gas company, both high on renewability. Completing the Bioleum separation back in May, and securing independent funding from strategic investors, has been remarkable. We are about to fully deconsolidate Bioleum from our financials, which will offer a clearer view of Comstock Metals and our fuel business.
As Zach mentioned, we will make some forward-looking statements, but I’d like to share a presentation on our corporate aspects and recent transactions, along with a deeper look into our metal recycling business, which is accelerating rapidly. The recent transaction we completed has fully funded us through the ramp-up to industry-scale operations. We completed an offering that has left us with a strong financial position. Prior to the offering, we had over 35.5 million shares outstanding, and after issuing 13.3 million shares in the offering, we raised $30 million gross, $27.6 million net, resulting in a cash position exceeding $45 million. Notably, our largest debt holder, who is also a major equity holder, agreed to exchange and pay down promissory notes with equity and participated in this equity offering. This represents solid confidence from one of our largest equity holders in eliminating our debt while increasing equity capital.
We also negotiated a lower premium to extinguish those convertible notes, which have now been completely paid off. We have been diligently preparing our businesses to commercialize and enhance revenue to attract more institutional capital. In my 30 years of experience, this offering has been one of the most successful and well-received. We have significantly broadened and deepened our capital base, transforming it from necessary to truly strong. Most importantly, we have funded our operations clearly to bring our first metals facility online profitably, and we have a solid plan for subsequent facilities. We will provide a detailed look at the metals business, and I believe you will be pleased with what Fortunato has developed. I'll also mention that the bankers we've been working with, who initially expressed doubts about our readiness around the Bioleum separation, are now seeing our progress positively.
They have a 15% overallotment option, which could lead to additional shares and proceeds—something we’ll monitor moving forward. I also want to welcome Judd back as our CFO. His impact has been significant from day one, especially regarding financial organization and freeing up my capacity to move things forward more quickly. Fortunato has been essential in building our metal recycling business and developing unique technology that I will highlight. Comstock Metals focuses on recycling solar panels. We initially ventured into battery metal recycling, producing good black mass yet struggling to achieve battery-grade metals. We sought technology to assist with the lamination and contamination issues, and Fortunato provided a solution. He suggested we shift focus to the emerging issue of end-of-life solar panels, which are coming out of the market much sooner than anticipated and represent a significant environmental concern.
There are millions of panels reaching the end of their lifecycle well ahead of projections. Importantly, this is an exponential growth trend, expected to surge tenfold in the next four years, presenting a critical environmental challenge as communities aim to minimize landfill waste. We charge a tipping fee for taking these panels, effectively resolving our customers' liability while ensuring these panels don’t end up contaminating ecosystems. Remarkably, there’s over 0.6 ounces of silver in every panel, along with aluminum and other valuable materials. Our integrated delamination process efficiently captures these materials without harmful emissions while ensuring a zero-landfill solution. We’ve demonstrated exceptional efficiency with a variable cost of less than 7% of our revenue. Notably, our process achieves a panel every seven seconds, allowing us to scale operations significantly—1 production line can process 3.3 million panels per year.
We’ve earned R2V3 certification as the only company in North America—if not the world—that has been verified as having a zero landfill solution while producing clean outputs. Our business model is attractive not only from an environmental perspective but also economically. We project substantial revenue from this model, with our facility poised to reach profitability even at lower utilization rates. We’ve laid out ambitious plans to capitalize on the growing demand for solar panel recycling, and we aim to rapidly expand our facilities to meet this emerging market. We've secured permits to store significant materials to increase our market share further. Looking ahead, as the number of panels reaching end-of-life rapidly increases, we are strategically positioned to dominate the solar recycling market. We have engaged with major customers and believe we offer a viable solution that competitors cannot match due to our capability to scale operations efficiently.
The financial upside is impressive, as we've detailed revenues and profit projections based on our fully-operational facility. We have made significant moves to secure the necessary equipment, and with our upcoming permit and commissioning schedule, we expect to be operational and profitable by mid-next year. As we address our future expansion, we intend to apply for additional permits promptly. Beyond the metals business, I want to briefly mention our other relevant assets, including our mining portfolio with substantial gold and silver resources, which we aim to monetize. The Bioleum separation has also positioned us strategically with excellent potential for investor interest. We’re seeing renewed opportunities as industrial developers express interest in our properties. Overall, we’re excited about where Comstock is headed and the immense potential our metal recycling business holds. Now, let’s proceed to the questions.
Thank you, Corrado. As I mentioned at the beginning of the call, we received more than 40 questions prior to the call. And I can see we have a number of additional questions coming through Zoom. Corrado and Judd, our first question is, congratulations on the funding. We really want to see the solar recycling maintain its market share lead. Have you already negotiated or ordered the equipment?
Yes, I previously mentioned this. After operating a demo facility for about four to five months, we confirmed that we could produce clean zero landfill materials, which was a significant achievement. Over the next twelve months, we focused on two main tasks. First, we tested every type of panel available to us, including monocrystalline, cylindrical, thin film, and various tile designs. We thoroughly validated the system with these materials. Secondly, Fortunato expanded and developed a comprehensive database covering every possible thermal cycle time, kinetic variable, and chemistry involved. With this extensive data and expertise, we completed the design for our larger system. Some said we were scaling up by 87 times, but that's not accurate. Currently, we are processing 5,000 tons a year and plan to increase that to 100,000 tons, which is a standard scaling process from lab work to pilot projects, and now to full operational demonstration. We're nearing 20 months into a 20 times scale-up, and this transition involves the same equipment from our manufacturer, with whom we've negotiated and refined the designs. We are prepared to purchase the equipment immediately, which requires a deposit of about 35% to 50%, amounting to around $5 million to ensure we stay on track for acquiring everything by the end of the year.
What are the lead times for the equipment? Should we expect higher CapEx due to tariffs?
That's a good question. So, the lead time is 4 to 6 months, right? And that's not really a range. That's 4 months for one type of equipment, 5 months for another type of equipment, a little buffer. So, people can understand how, for us, getting this ordered by now is absolutely critical so that it could coincide and synchronize with our permits coming in by the end of this year. All of our equipment is manufactured domestically. We have 2 major suppliers in California, very close to home. We have one in Oregon. So, it's like no tariffs, no tariffs.
Can you phase in the capital for a facility?
So that question likely arose from something I mentioned earlier. We had outlined a scenario where instead of $9 million to $10 million, we could initially invest $6 million, followed by another $3 million to $4 million. However, the way our advanced crushing and separating system was designed, we encountered what I would call a mini breakthrough that indicated it makes more sense to deploy the entire system. Thus, we will not phase it in. The first production line of the 100,000-ton system will be launched all at once. In theory, we could implement another 100,000-ton system in the same facility when demand requires it. Demand is increasing, and our projects are advancing. Our relationships with the major utility companies are progressing. This growth will not be linear; it's going to be uneven. It will involve significant orders and large panels. If we are not prepared to handle and process these orders, we need to at least be ready to store them. Failure to do either could result in us missing out on market opportunities. Therefore, rapidly deploying this capacity is essential; it's less likely we will phase it, and a full line will be set up immediately.
Can you permit and build facilities in parallel? Are the other states easier or harder to permit in?
I mentioned Nevada, which I consider to be on the more challenging end of the scale. Nevada has developed into a recycling hub, not for solar panels—since we're the only ones doing that—but for batteries. Companies like Redwood and American Battery are also recycling here. Each state interprets federal regulations differently, and some work together. However, due to Nevada's sophisticated mining industry, they take regulations very seriously. The good news is we've successfully navigated one of the toughest challenges. I understand Texas has a more straightforward process, and I mean no disrespect by that. We have hired a top regulator from the Nevada Department of Environmental Protection, who was involved in many regulations and guidelines regarding hazardous waste handling and recycling. She is currently exploring potential sites and states that interest us, and we're preparing to adjust our existing permitting process once we move out of Nevada.
I believe we will get our first facility commissioned in the first quarter and operational by the second quarter. We will aim to expedite the process for the second facility in Nevada, provided we file that permit by the end of this year. That will allow us to accelerate the timeline for it to be operational, potentially by the first quarter of next year. Then, we need to consider how we can proactively identify and permit two or three additional sites simultaneously, with the aim of enabling storage as well. Having storage, which generally has a shorter permitting lead time, would allow us to capture business even ahead of securing our processing permits. I previously mentioned that if we achieve one facility a year for three years and only capture a 30% market share, I would consider that underperforming. My goal is to strive for 100% market share, but we’ll see how things unfold. Achieving 50%, 60%, or 70% of the market will be due to our ambition, not settling for less.
With our $55 million facilities, we begin contemplating the establishment of five, six, or seven facilities. Keep in mind, we are only discussing the United States here, and that represents a significant opportunity.
A person is confused by the potential market. Is it millions of solar panels or millions of tons?
So, well, ultimately, it's both. So today, or at least in 2024, we saw over 3 million panels come to the end of life, 3 million panels, which is about 100,000 tons. In 2030, it's going to be 1 million tons in the United States. In 2050, we're projecting 8 million tons. So, it's millions of panels today. It will be tens and then hundreds of millions of panels in the future. It's hundreds of thousands of tons today. It will be millions of tons in the future. Good question, though. Good clarification.
And metals success seems to rely on long-term contracts. MSAs are good, but do you expect stronger, longer guaranteed contracts?
I think this question is quite significant regarding the market. Let me clarify. There are three factors that provide us with a competitive edge. First, our zero landfill solution. We have no competitors that claim to be zero landfill. The best we've heard is a 90% recovery rate, with some claiming up to 95%, but we are at zero landfill. Second, we have the capacity to handle millions of panels, which no one else can do besides us and a landfill. The major landfill companies refuse to take this material. So, where does it end up? There are questionable practices involved. Our customer base, which we project to be 85% of the market, consists of highly sophisticated and responsible utility companies with HS&EP professionals. It's worth noting that the two largest utility companies in California have directly contacted our regulators in Nevada to review our permits, which is exactly what we want.
We have the scale and provide environmental peace of mind to our customers. We offer them assurance since if these materials can't be destroyed or transformed into a useful product, it's a liability they must bear, similar to a superfund issue. We deliver them definitive peace of mind, and we can scale this solution. Currently, scaling is in its early stages. Even when a large company has tens of thousands of panels, we successfully processed 80,000 panels from one customer in Q1. While someone might manage to take in those panels, when it comes to half a million or a million panels, the situation becomes quite different. That's the second competitive advantage. The third is cost. We are the fastest and most efficient, with total costs at $150 per ton, the lowest in the market. If you are located in California, Nevada, or Arizona, you win. No one can compete with us. If they are in Texas or Florida, they face an additional transportation cost of $150 to $250 per ton.
They can't compete with us. However, if there’s someone in Florida, we need a presence there, as well as in Georgia, North Carolina, and Texas, to avoid being at a logistical cost disadvantage. Currently, customers pay to send their panels to us, but it's an all-inclusive cost. If we don't keep costs minimal, retention won't be feasible. I hope I answered your question effectively. The point is that the MSAs clearly define the interdependent and operational parameters between us and the customer. In other words, everything is arranged for us to take that many panels from them. We don’t see anyone else having that infrastructure in place. Once this becomes evident, the agreements will likely favor them, potentially resulting in longer-term and more secure contracts. They will seek some economic advantage from granting us all that business, and we are open to that. But for now, we believe we are the only ones capable of managing all that business, and locking it into long-term contracts might not be in our best interest. We understand it provides peace of mind, yet we know where the panels are, the economic agreements in place, the logistics agreements, and the business is coming our way.
Why are the asset sales taking so long? What is really happening there? Can you provide some better insight?
I briefly mentioned the bottleneck in the power grid when large companies like Google, Microsoft, and Tract negotiated their power agreements to run their data centers. Switch secured their agreements a long time ago. Initially, everything was fine. However, with entities like Powerhouse and Encore getting involved, the lead time for power agreements increased significantly, from six months to potentially two years. While a two-year lead time can be manageable for larger industrial projects, it caused many to reconsider their plans. As a result, companies searched nationwide for available power, finding sources like 50 megawatts in San Antonio or 65 megawatts in Georgia to set up new data centers. Now, with tens and hundreds of billions of dollars being invested, similar to sovereign nations, the focus is not just on profit from data, but on competing in the AI space. Despite concerns about power availability, many are willing to invest in alternative energy sources like natural gas, geothermal, solar, and nuclear.
Various consortiums are collaborating on these projects, and surprisingly, the scale is much larger than I anticipated. We are currently involved with four or five of these new strategic initiatives, and while I won't take any credit until we secure the deals, I'm feeling more optimistic. We've faced some ups and downs, but it's not due to lack of effort or competence; rather, the market is dynamic. Overall, this eventually leads to greater value for our properties, but we need to finalize these deals and move forward.
Corrado, Judd also serves as the President of Comstock Mining. Our next question is, are we going to sell or mine the gold and silver mineral assets?
Judd has a long career in precious metal mining with three different companies, aside from ours, that resulted in sales to mid-tier or large mining companies. That's a rare achievement. We plan to monetize our assets. While I can't provide more details right now, there are companies interested in buying them, entering joint ventures, and funding projects. The interest spans a wide range of options. Although it's not as intense as the real estate discussions we're having, the momentum is definitely increasing. I'm uncertain where this will lead, but our objectives are to generate some revenue, hopefully significant, and to unlock value for our shareholders. This could involve separating or spinning off some assets, and it's part of the transformational strategies I mentioned in our January shareholder letter. I must say that for the first five or six months of the year, we mostly received inquiries that turned out to be unconvincing or insignificant. Recently, however, we've started getting inquiries that are both meaningful and compelling. Without Judd's involvement, I'm not sure how effectively we could have prioritized these opportunities. Now, we are in a position to fully prioritize them.
Corrado, as a shareholder, this person is not clear what they get from a future Bioleum IPO, will it get shares equal to the shares?
I apologize for any confusion we may have caused initially by using terms like spinout and providing examples of what was possible. We quickly realized that an efficient share-for-share spinout wasn't feasible, especially in a tax-free manner for our shareholders. More importantly, Bioleum isn’t currently generating revenue or profit, so taking that company public soon would have likely been detrimental. Instead, we protected our investment with preferred shares, holding 76% of the underlying common, which amounts to 32.5 million shares. Our agreement stipulates that we can’t convert to common shares until there’s an IPO. If an IPO occurs and we keep our investment, our ability to convert common shares is limited unless we decide to distribute them to our shareholders, which we could do entirely. I can't predict when it will go public, the future valuation, or if we would distribute shares to shareholders.
However, if the company emerges as a multibillion-dollar entity and we hold a significant stake, having a validated public valuation would greatly enhance our chances of it reflecting in our valuation, compared to the current situation where it appears to have little impact. Ensuring they are funded and can execute their significant business plan—bigger than anything I've encountered before—will be incredibly beneficial for our shareholders, no matter how you look at it. If we do have a multibillion-dollar company that we own a majority of, and it's not affecting our share price, we may need to consider distribution or other options. We will always act as responsible fiduciaries for our shareholders based on the information we have. Although we haven’t seen major recognition yet, we are witnessing some. Funding is flowing directly into the business, and we have attracted numerous world-class institutional investors to our stock, which wasn’t the case before.
We now boast a strong base of high-quality institutional capital alongside sophisticated high net worth and retail investors, creating a balanced situation. Moving forward, we need to execute effectively. My detailed overview of the metals plan was designed to emphasize execution: obtaining permits, acquiring equipment, commissioning the facility, securing larger customers, expanding storage, submitting further permits, and remaining aware of the competitive landscape. Competitors may emerge, but if they take 2 to 3 years, they will be too late.
Thank you, Corrado. Well, it looks like we have come up on 1 hour. So that concludes Comstock's Second Quarter 2025 Earnings Call and Business Update. If we did not get to your question, please send it to ir@comstockinc.com and we'll do our best to respond either directly or we'll post the response on X. For anyone who is not following us on X, our main account is at Comstock Inc. Please follow us. And Corrado, did you want to your closing thought?
Yes. I want to make three closing statements. First, I noticed a question regarding why a little over $1 million of the proceeds is being allocated to Northern Comstock. I want to clarify that as part of these proceeds and our agreement, we acquired highly valuable mineral properties in the central district through this Northern Comstock entity. The agreement stipulates that if we have a liquidity event exceeding $12.5 million, we must accelerate one payment. We are doing that, but the good news is this acceleration leads to the complete fulfillment of the payments for that mineral property, meaning we have fully paid for it and eliminated almost $820,000 in annual expenses from our P&L. From this point forward, we have no further obligations or expenses, and we own 100% of these mineral properties, which contain hundreds of thousands of ounces. Second, before this offering, we fully eliminated the obligation related to the acquisition of the organosolv technology for fuels from American Science and Technology.
This also meant getting rid of nearly $1 million in annual lease and rent expenses, and we now own the property outright with no rent to pay. We have also removed the obligation connected to the acquisition of the Haywood Quarry, a critical property adjacent to our Dayton operation that supports our mine plan. Additionally, we have extinguished the obligation tied to LiNiCo, which owns the Green Li-ion investment. All these obligations are cleared from our balance sheet. We have also settled the convertible note and reduced the promissory notes. It would be difficult for me to stress how significant this change is, especially for investors who have been concerned. The pressure from trying to acquire assets through stock and using a convertible note has affected our valuation. Some investors may be upset and have sold shares, and I regret that. However, I encourage you to consider buying back those shares because our foundation is solid, our technology is established, customers are coming in, revenue is increasing, and we are well-funded.
Moving forward, the challenges we faced before are behind us. Our bankers have indicated they won't even connect us with institutional investors until they can confirm that our liabilities are resolved. I want to emphasize how significant that is. Please watch for updates in metals, as they will be impressive. The fuels segment will also provide updates, and our efforts in Oklahoma are gaining strong support. Thank you for your understanding, and I apologize for exceeding our time. I just wanted to share these final thoughts.
Okay. Thank you very much, Corrado. And thank you, everyone, for joining us today. This concludes our webcast.
Thank you.