Comstock Mining solicits consents to convert preferreds into stock

New York, July 29 – Comstock Mining Inc. said it is soliciting consents to convert its 7˝% series A-1 convertible preferred stock, 7˝% series A-2 convertible preferred stock and 7˝% series B convertible preferred stock into common stock.

Under the solicitation, Comstock is seeking to amend the certificates for the preferreds. The proposed amendments will result in the automatic conversion of the preferreds.

In addition, if approved, Comstock will declare a one-time dividend of 127 shares of common stock per share of preferred stock.

The solicitation ends at 11:59 p.m. ET on Aug. 26.

A majority of the holders have indicated their intention to authorize the amendments.

Comstock needs the authorization of holders of a majority of the preferreds.

There are currently 24,361.99 shares of the A-1 preferreds, 1,610.20 of the A-2 preferreds and 22,626.20 of the B preferreds outstanding. They would convert into 13,712,848 shares and the one-time dividend would add an additional 2,870,304 shares.

The company also said it has reached agreement with the other members of its Northern Comstock LLC joint venture that will reduce its required capital contributions to $9.75 million from $31.05 million, defer some payments and permit them to be made as cash or, in some circumstances, stock.

The agreement is with company chairman John V. Winfield and entities that he controls.

“We have achieved tremendous progress despite significant challenges and obstacles, in the midst of one of the most difficult markets for junior miners,” Winfield said in a news release.

“We have consolidated an unprecedented land position in a world-class silver and gold district, developed our resources, constructed and permitted a low-cost operation and have successfully established production while developing multiple, high-grade targets. These achievements, coupled with a simpler, more efficient capital structure that equally aligns all of our shareholders, provide a clear path for maximizing the intrinsic value of the company’s precious metals, real estate and the unique, historical Comstock brand.”

Comstock said that Winfield has told it he will, on successful conversion, donate all of his resulting personal dividends to the Comstock Foundation, a 501 (c) 3 organization dedicated to the protection, preservation and restoration of the Comstock.

Winfield will also leave the board to focus on the work of the foundation and its efforts to enhance the national historical landmark and the Comstock brand.

Comstock Mining is a Virginia City, Nev.-based gold and silver mining company.

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