Comstock Mining

Kurta Law is investigating recommendations of Comstock Mining (LODE) stock for their potential unsuitability for investors. Companies initiating a stock offering must file a type of disclosure with the SEC called a prospectus. Given the information in Comstock Mining’s prospectus, its risky stock was not suitable for all investors.

FINRA arbitration offers a lower-cost, time-effective avenue for remedying losses than pursuing a civil suit. Consider reaching out to us at (877) 600-0098 or email info@kurtalawfirm.com to speak to one of our securities attorneys for free today.

What is Comstock Mining?

Comstock Mining (LODE) is a gold and silver mining company that owns property in the Comstock and Silver City mining districts in western Nevada. The company primarily extracts gold and silver from its Lucerne and Dayton Resource areas and intends to develop plans for four other potential resource areas.

Through its real estate arm, Comstock Mining owns Daney Ranch, the Gold Hill Hotel, various rental properties, and land.

What are the Risks Associated with Comstock Mining?

In its stock prospectus, Comstock Mining identifies several major risks that investors should know about.

Notably, Comstock Mining states that “there is substantial risk that the Company will be unable to continue as a going concern,” due to the possibility that it will be unable to generate enough revenue through its mining operations. Should the company go under, creditors and holders of preferred stock would be paid before common stockholders, for whom the investment could be a total loss.

Dilution of Share Value

The prospectus states that investors will experience an immediate dilution of $0.22 per share due to the difference in the share price in this offering versus the net tangible book value of each share. The adjusted net tangible book value per share of this stock was, at the time of the prospectus, only $0.13.

Stockholders may also experience dilution of their ownership interests if Comstock Mining issues more equity securities in the future. Since the company states that it will require “substantial capital investment” for its future projects, this is a significant risk.

No Expected Dividends

Due to the company’s need for funding, it “currently expect[s] to retain all funds and future earnings, if any, for use in the operation and growth of our business.” Comstock Mining does not expect to pay cash dividends to stockholders. This further limits the value of this stock for potential investors, who would need to rely on its price rising in order to make a profit.

Stock Price Fluctuations

According to the prospectus, the market price of this stock may “fluctuate significantly from time to time.” Some factors in these fluctuations include investors’ perceptions of the company’s prospects and of the mining and commodities markets, as well as any substantial changes in the company’s quarterly financial and operating reports.

Aegis Capital Corp. Underwriting  

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

What Can I Do If I Suffered Losses?

If you believe Comstock Mining was too risky for your risk profile, consider reaching out to one of our securities attorneys. Our attorneys regularly take on cases of unsuitable investment recommendations and broker misconduct and have experience winning fair settlements for our clients. Call (877) 600-0098 or email info@kurtalawfirm.com.