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Comstock Mining Inc. is a producing, Nevada-based, gold and silver mining company with extensive, contiguous property in the historic Comstock and Silver City mining districts (collectively, the “Comstock District”). The Comstock District is located within the western portion of the Basin and Range Province of Nevada, between Reno and Carson City. The Company began acquiring properties and developing projects in the Comstock District in 2003. Since then, the Company has consolidated a substantial portion of the Comstock District, secured permits, built an infrastructure and brought the exploration project into production. Because of the Comstock District’s historical significance, the geology is well known and has been extensively studied by the Company, our advisors and many independent researchers. We have expanded our understanding of the geology of the project area through vigorous surface mapping and drill hole logging. The volume of geologic data is immense, and, thus far, the reliability has been excellent, particularly in the various Lucerne Mine areas. We have amassed a large library of historic data and detailed surface mapping of Comstock District properties and continue to obtain historic information from private and public sources. We use such data in conjunction with information obtained from our current mining operations to target geological prospective exploration areas and plan exploratory drilling programs. Our Lucerne Resource area is located in Storey County, Nevada, approximately three miles south of Virginia City and 30 miles southeast of Reno. Our Dayton Resource area is located in Lyon County, Nevada, approximately six miles south of Virginia City. Access to the properties is by State Route 342, a paved highway. The near term goal of our business plan is to deliver stockholder value by validating qualified resources (measured and indicated) and reserves (proven and probable) of at least 3,250,000 gold equivalent ounces from our first two resource areas, Lucerne and Dayton; and significantly grow the commercial development of our operations through coordinated, district wide plans that are economically feasible and socially responsible. About Our Operating Methodology, the Decalogue™ Our operating model brings together the management theories and philosophies developed by two physicists: Dr. Eliyahu M. Goldratt`s Theory of Constraints and Dr. W. Edwards Deming`s Theory of Profound Knowledge and facilitates their application through a set of logical thinking tools and statistical methods. Through these methods, we thoroughly map our processes and identify, measure and subordinate to the constraint in our system, which is defined as the process that most hinders the generation of throughput. Throughput is the speed at which a system can generate cash. In our case, it is the speed at which we can generate cash, daily, from the sale of gold and silver. Our system begins with a set of geological assessment processes that include the acquisition, compilation, planning and analysis of our geological footprint. This includes quality processes over maintaining a geological library of over 100 years of historical data and current data, maps, interpretations and resource estimates, with the highest professional standards. This foundation drives our system’s work process toward our goal of delivering stockholder value by validating qualified resources (at least measured and indicated) and reserves of 3,250,000 gold equivalent ounces by 2013, and commencing commercial mining and processing operations in 2012, with annual production rates of 20,000 gold equivalent ounces. The “constraint” processes in our system that are critically interdependent with each other include Mine Planning and Scheduling, Permitting, Mining (Extraction), Processing and Logistics. They also include Geological Assessment, Exploration Planning, Surveying and Exploration Drilling. They are supported by quality process in Engineering, Maintenance, Health, Safety, Communications, Financial, Human and other administrative services. The system works as a whole, interdependently, with one goal. Since we will manage throughput by synchronizing all aspects of our system, it is critical that a holistic approach is used to understand our business. To do that, we use a “One System Schematic” to replace traditional organizational charts. What our methodology acknowledges, that other organizational designs often miss, is the systemic nature of an organization. This means that we understand how one part of our system inter-depends with the other. We cannot work in silos or in a vacuum. Our people and processes must understand their responsibilities to the system as a whole and operate reliably in those defined interdependencies. We define our system at the process level with Deployment Flow Charts and we will monitor the effectiveness of these key processes, statistically. Thus, the same tools that are used to monitor and manage variation in Exploration or Mining Extraction will also be used to monitor and manage variation, statistically, in other processes within the system. The aim is to have one system, statistically monitored, moving daily, in its entirety and at a scheduled pace, like the beat of a drum, towards the same goal. That is how we define our One, Quality System.
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