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Agreements with Tonogold | 3 Months Ended
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Mar. 31, 2019
Equity Method Investments and Joint Ventures [Abstract] |
Agreements with Tonogold | Agreements with Tonogold Membership Interest Purchase Agreement On January 24, 2019, the “Company entered into an agreement with Tonogold (the “Tonogold Agreement”). Under the terms of the Tonogold Agreement, the Company will sell Tonogold its interests in Comstock Mining LLC, a wholly-owned subsidiary of Comstock (“CML”) whose sole assets are the Lucerne Mine properties and related permits. Upon closing, the Tonogold Agreement would replace the October 2017 Option Agreement (the "Option Agreement"). The purchase price for CML is $15 million, plus Tonogold will also guarantee the Company’s financial responsibility for its membership interest in Northern Comstock LLC, who owns and leases certain mineral properties in the Lucerne area, and assume certain reclamation liabilities. The Company also retains a 1.5% net smelter return royalty on the Lucerne properties. Amendments to Tonogold Agreement On April 30, 2019, the Company and Tonogold entered into the Purchase Agreement Amendment ("First Amendment)"), which allows Tonogold the option to extend the closing until August 30, 2019, upon the payment of three additional $1 million non-refundable deposits and other considerations. In addition, the First Amendment requires Tonogold to reimburse the Company the monthly interest expense on the Senior Secured Debenture (GF Comstock 2) beginning on June 1, 2019, through the latest possible closing of August 30, 2019. On May 22, 2019, the Company and Tonogold entered into the Second Purchase Agreement Amendment ("Second Amendment"), which allowed Tonogold to forgo funding the remaining $0.7 million in cash payments due in May, 2019, as required in the First Amendment. The total cash consideration for the Tonogold Agreement remains at $11.5 million in cash. The Second Amendment required that Tonogold issue the Company $3.5 million in convertible preferred shares ("Preferred Shares"), subject to certain pricing conditions and restrictions. Tonogold also issued an additional $0.4 million in Preferred Shares as a commitment fee. The Preferred Shares were issued on June 7, 2019. The Preferred Shares convert to common shares of Tonogold in two equal tranches after closing the transaction. The first tranche converts upon the four month anniversary of the closing and the second tranche at the twelve month anniversary. The conversion price is the lowest of Tonogold’s (1) 20-day volume weighted closing price prior to conversion, (2) most recent private placement, or (3) initial public offering price. If the closing does not occur within the amended timelines, the stock is automatically convertible at 85% of the then current volume weighted average price. As of June 7, 2019, Tonogold has paid the Company $2.35 million in non-refundable cash deposits and $3.5 million in non-refundable Preferred Shares associated with the $15 million purchase price with a remaining balance due of $9.15 million. Option Agreements under Tonogold Agreement The Company and Tonogold also agreed that commencing upon the closing of the sale of CML, it will enter into a new Option Agreement to lease its permitted American Flat mining property, plant and equipment to Tonogold for crushing, leaching and processing material from the Lucerne mine. Under this new Option Agreement, Tonogold will be required to reimburse the Company for an additional $1.1 million per year to maintain the processing facility lease option. If such option is exercised, Tonogold will then pay the Company a rental fee of $1 million per year plus $1 per processed ton, in addition to all the costs of operating and maintaining the facility, up to and until the first $15 million in rental fees are paid, and then stepping down to $1 million per year and $0.50 per processed ton for the next $10 million paid to the Company. The Company has also agreed, upon the closing of the sale of CML, to enter into a ten-year mineral lease for additional mineral properties in Storey County, Nevada, granting Tonogold the right to explore, develop and mine these properties. Tonogold will assume approximately $100,000 in annual costs for these properties and will assume work commitments totaling more than $200,000 in 2019. The Company will retain a 3% net smelter return royalty on these additional leased properties, which will be reduced to 1.5% one year after the commencement of mining operations. The lease is renewable for an additional ten-year term. Existing Option Agreement On October 3, 2017, the Company entered into the Option Agreement with Tonogold. Under the terms of the Option Agreement, Tonogold has the right to participate in certain activities, including but not limited to, engineering, development, drilling and test-work, towards completing an economic feasibility assessment on certain properties within the Company’s Lucerne resource area (the “Lucerne Property”). The Option Agreement remains in effect until the Tonogold Agreement closes. Under the terms of the Option Agreement, Tonogold can earn a 51% interest in CML, which owns the Lucerne Property by meeting certain requirements and financial milestones. These requirements and milestones include: (1) making capital expenditures on the Lucerne Property and related expense reimbursements to the Company of $20 million no later than 42-months following the Commencement Date of April 3, 2018, and (2) making option payments totaling $2.2 million to the Company. Tonogold made a $0.2 million option payment on October 3, 2017, and a second and final option payment of $2.0 million on April 3, 2018. The option payments were both recorded within stockholders' equity as they relate to Tonogold’s right to earn-in to a 51% interest in CML. The Company has recognized approximately $0.2 million and $0.2 million in expense reimbursements for the three months ended March 31, 2019, and 2018, respectively. On April 9, 2019, the Company received $0.2 million from Tonogold for routine reimbursement for monthly expenses and for the remaining balance due on the March 2019 non-refundable deposit.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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