Note 4 - Properties, Plant and Equipment, Net and Mineral Rights

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE 4                  PROPERTIES, PLANT AND EQUIPMENT, NET AND MINERAL RIGHTS

Properties, plant and equipment at September 30, 2024 and  December 31, 2023 include the following:

	September 30, 2024			December 31, 2023
Land	$	—		$	6,328,338
Real property leased to third parties		1,037,049			1,037,049
Property, plant and equipment for mineral processing		27,644,745			27,644,745
Other property and equipment		7,561,408			7,394,191
Accumulated depreciation		(27,622,556	)		(27,200,293	)
Total properties, plant and equipment, net	$	8,620,646		$	15,204,030

During the three-months ended September 30, 2024 and 2023, we recognized depreciation expense of $143,265 and $142,915, respectively. During the nine-months ended September 30, 2024 and 2023, we recognized depreciation expense of $422,263 and $478,388, respectively. At September 30, 2024 and December 31, 2023, the Company had $433,411 and $402,931, respectively, of properties, plant and equipment that were not yet placed in service and have not yet been depreciated. In the third quarter of 2024, the Company impaired obsolete equipment not yet placed in service in our Corporate segment. For the three and nine-months ended September 30, 2024, the Company recorded an impairment loss of $324,047 for equipment recorded in impairment of properties, plant and equipment in our condensed consolidated statement of operations. 

Mineral Rights and Properties

Our properties at September 30, 2024 and  December 31, 2023 consisted of the following: 

	September 30, 2024		December 31, 2023
Comstock Mineral Estate	$	10,842,716	$	12,164,013
Other mineral properties		317,405		317,405
Water rights		90,000		820,595
Total mineral rights and properties	$	11,250,121	$	13,302,013

The Comstock Mineral Estate includes all of the Company's resource areas and exploration targets. During the nine-months ended September 30, 2024 and 2023, we did not record any depletion expense, as none of the properties are currently in production. All of our mineral exploration and mining lease payments are classified as selling, general and administrative expenses in the condensed consolidated statements of operations.

On June 30, 2023, the Company signed a Mineral Exploration and Mining Lease Agreement (the “Mining Lease”) with Mackay Precious Metals Inc. (“Mackay”). The Mining Lease provides a twenty-year term granting Mackay the rights to conduct exploration on certain of the Company’s mineral properties in Storey County, Nevada. Mackay paid a lease initiation fee of $1,250,000 and made their first two quarterly lease payments totaling $875,000, with subsequent quarterly lease payments of $375,000 for the next three and a half years, and then remaining quarterly lease payments of $250,000 thereafter. In addition, Mackay will reimburse carrying costs for the mineral properties and will pay a 1.5% Net Smelter Returns (“NSR”) royalty from eventual mine production from the mineral properties. Mackay also committed to exploration expenditures of $1,000,000 per year on a cumulative basis, and increasingly detailed technical reports after the first five, ten, and fifteen years. 

We determined that the Mining Lease initiation fee of $1,250,000 should be recognized as revenue ratably over the term of the Mining Lease and quarterly lease payments will be recognized as revenue in the period received. For the three and nine-months ended September 30, 2024, we recorded revenue of $390,625 and $1,171,876, respectively, which includes the quarterly lease payments of $1,125,000 and amortization of the lease initiation fee of $46,876. For the three and nine-months ended September 30, 2023, we recorded revenue of $490,625 which included the first quarterly lease payment of $475,000 and amortization of the lease initiation fee of $15,625. In 2024, the Company committed a plan to sell the mineral properties in Storey County, Nevada and $1,171,874 of deferred revenue for the initiation fee remains and is recorded as current deferred revenue in our condensed consolidated balance sheet. 

Assets Held for Sale

In the second quarter of 2024, the Company committed a plan to sell industrial and commercial land located in Lyon County, Nevada. This balance of $6,328,339 is classified as assets held for sale on the condensed consolidated balance sheet as of  September 30, 2024. 

In the first quarter of 2024, the Company committed a plan to sell the membership interest, including the mineral rights, in Comstock Northern Exploration LLC. As of  September 30, 2024, assets held for sale include mineral rights with a balance of $1,321,297. 

In March 2023, the Company acquired senior water rights (50-acre feet) associated with one of its existing properties and junior water rights (16-acre feet) for a total of $730,595. In the second quarter of 2024, the Company committed a plan to sell the water rights and reclassified those water rights to Assets Held for Sale on the condensed consolidated balance sheet. 

The Company’s assets held for sale at September 30, 2024 and  December 31, 2023 include the following:

Assets held for sale	Asset group	September 30, 2024		December 31, 2023
Mineral rights	Mineral rights and properties	$	1,321,297	$	—
Water rights	Mineral rights and properties		730,595		—
Land	Properties, plant and equipment, net		6,328,339		—
Total assets held for sale		$	8,380,231	$	—