Is Comstock Mining (LODE) Stock Worth Buying?

Comstock Mining Inc. (NYSE: LODE) is having a strong start to the trading session this morning after announcing that it has acquired majority ownership of LiNiCO Corporation from its founder, Michael Vogel. Here’s what’s happening:

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LODE Stock Heads Up On Acquisition News 

LiNiCo is quickly emerging as a leader in the production of electrification products, and thanks to a recent acquisition of shares, Comstock Mining is now the majority shareholder of the company. 

In the press release, LODE said it purchased 3,129,081 shares of LiNiCo from its founder in exchange for 3,500,000 restricted Comstock common shares, and acquired an additional 4,075 Series A Preferred shares, increasing its overall ownership of the operation to 90%. 

This is a huge acquisition for Comstock Mining considering LiNiCo’s leadership in the extraction of lithium carbonate and graphite from recycled lithium-ion batteries with proprietary extraction technologies. In fact, the company’s first state-of-the-art production facility is being retrofitted and scheduled to commence initial production with the ability to eat through 35,000 tons of feedstock per year by the second half of 2022 and full capacity ultimately reaching 100,000 tons per year. 

What’s the Big Deal?

There’s been a shortage in lithium around the world as rechargeable batteries become more important in our daily lives. Now, as electric vehicles boom onto the scene, more lithium ion batteries are going to be demanded, burnt through, and ultimately sent off for recycling. 

This opens the door to a world of feedstock for LiNiCo. 

Think about it, the International Energy Agency points to the fact that by the end of 2020, there will be more than 10 million electric vehicles on roads around the world, and the growth in adoption of these vehicles is expected to continue to be strong. 

Meeting the continued and growing demand will require far more lithium carbonate than is being produced in any capacity today. So, by using its technology to recycle lithium carbonate from used lithium ion batteries, the company is essentially creating a new product by recycling garbage, and that product just so happens to be in incredibly high demand now, and for the foreseeable future. 

The opportunity here is just too significant to ignore. 

Management Commentary

In a statement, Corrado De Gasperis, CEO and Executive Chairman at LODE, had the following to offer:

“Increasing our investment in LiNiCo was a natural extension of our plan to build high-cash generating processes that tap into massive markets and decarbonize the supply chains of increasingly scarce natural resources. 

We believe that LiNiCo’s pioneering extraction technologies will quickly prove to be the best, most sustainable, and most valuable process for the production of lithium and other electrification products from both recycled batteries and virgin natural resources. Increasing our stake to approximately 90% will allow us to fully consolidate and control LiNiCo’s business plans, revenue and earnings, while enabling our shareholders to participate in the expected significant positive impact of LiNiCo’s business and related proprietary technologies on Comstock’s valuation.

LiNiCo’s partnerships and propriety technologies differentiate us from our peers by enabling the up-front extraction of lithium and the direct refining of nickel, cobalt, and other metals. We are looking forward to incorporating these new processes into our facility and offering best-in-class, sustainable electrification products at a fraction of the costs.”

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The Bottom Line

The bottom line here is simple. This acquisition is great for the company and those that invest in LODE stock. It gives Comstock Mining majority ownership of an operation that could become a driving force in the lithium market, helping to support the growing efforts to go green. Moreover, because of the “go green” movement, the potential for profitability here is hard to ignore. All in all, this is a huge win for all involved. 

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