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Tonogold Resources Inc. ("Tonogold") Securities | 9 Months Ended
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Sep. 30, 2020
Receivables [Abstract] |
Tonogold Resources Inc. ("Tonogold") Securities | Tonogold Resources Inc. ("Tonogold") Securities Investments in Tonogold Convertible Preferred and Common Shares The consideration received for Tonogold's acquisition of Comstock Mining LLC under the membership interest purchase agreement (the "Purchase Agreement") (Note 20) included shares of Tonogold Series D Convertible Junior Participating Non-Cumulative Perpetual Preferred Stock ("CPS"). During 2019, the Company received $6.1 million in Tonogold CPS. The CPS became convertible into common shares on May 22, 2020. The conversion price for the CPS is the lower of (1) 85% of the 20-day volume weighted closing price or (2) $0.18 cents per share. Tonogold can redeem the CPS prior to conversion, at a redemption price 120% of the face value of the CPS. The CPS was recorded at a fair value of $7.6 million when received. On May 22, 2020, and September 29, 2020, the Company elected to convert $1.1 million and $2.8 million of CPS, respectively, at $0.18 per common share, for a total of 21,777,778 Tonogold common shares. On October 2, 2020, Tonogold redeemed the remaining $2.2 million of CPS for $2.6 million in cash, representing 120% of face value. During the three and nine months ended September 30, 2020, the Company sold 3,450,138 Tonogold common shares at an average price of $0.40 per share for gross proceeds of $1.4 million and 3,557,209 common shares also at an average price of $0.40 per share for gross proceeds of $1.4 million, respectively. At September 30, 2020, the Company has total investments in Tonogold valued at $9.7 million, including $2.2 million in CPS valued at $2.6 million, and 18,220,569 common shares valued at $7.1 million. The fair value of the common shares is based on the $0.39 closing share price (OTC: TNGL) on September 30, 2020 (Note 17). Tonogold Note Receivable The consideration received for Tonogold's acquisition of Comstock Mining LLC (Note 20) included a senior secured convertible note (the "Note"). The Note had an initial principal balance of $5,475,000 when the Note was issued on March 20, 2020. The outstanding principal balance was $4,475,000 when the Purchase Agreement closed on September 8, 2020. The Note has an interest rate of 12%, with interest payable monthly. The principal is due on September 20, 2021, unless extended by the Company. The Note includes the following features: 1) conversion feature allowing the Company, at the Company's sole option, to elect payment in Tonogold common shares upon certain events; 2) change of control redemption right allowing the Company to redeem the Note in cash at a 125% premium; 3) event of default redemption right allowing the Company the right to redeem the Note in cash at a 118% premium; and 4) an option for the Company to extend the maturity date. On September 8, 2020, the fair value of the Note was $6.1 million, based on a Monte Carlo model with various inputs, including the Tonogold common share price of $0.35, volatility of 96%, risk-free rate of 0.15%, cost of debt of 11.12%, required conversion premium of 30%, probability of prepayment of 5%, probability of change of control of 5% and probability of default of 27%. On September 30, 2020, the fair value was updated with a Tonogold common share price of $0.39, resulting in a fair value of $6.4 million, and a gain in change in fair value of $0.3 million recorded in other income in the condensed consolidated statements of operations. The Note was previously accounted for as a contingent forward (Note 20). Upon closing of the Purchase Agreement, the contingencies were eliminated, and the Note was recorded as a current asset in the condensed consolidated balance sheets.

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