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

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

During the three-months ended June 30, 2024 and 2023, we recognized depreciation expense of $139,060 and $215,376, respectively. During the six-months ended June 30, 2024 and 2023, we recognized depreciation expense of $278,998 and $335,473, respectively. At June 30, 2024 and December 31, 2023, the Company had $402,931 of properties, plant and equipment that were not yet placed in service and have not yet been depreciated. 

Mineral Rights and Properties

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

The Comstock Mineral Estate includes all of the Company's resource areas and exploration targets. During the six-months ended June 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 quarterly lease payments of $375,000 for the next three and a half years, and then 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 six-months ended June 30, 2024, we recorded revenue of $390,626 and $781,251, respectively, which includes the quarterly lease payments of $750,000 and amortization of the lease initiation fee of $31,251. For the three and six-months ended June 30, 2023, no revenue was recorded. As of June 30, 2024, the Company committed a plan to sell the mineral properties in Storey County, Nevada and $1,187,499 of deferred revenue for the initiation fee remains and 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 asset held for sale on the condensed consolidated balance sheet as of  June 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  June 30, 2024, assets held for sale include mineral rights with a balance of $1,321,297. 

On April 26, 2023, the Company closed on the purchase of Aqua Metals Transfer LLC, a subsidiary of Aqua Metals Inc. ("AQMS"), including land, buildings and related improvements therein and paid the $12.0 million due to AQMS, effectively taking full ownership of the land, buildings and related improvements and the previously existing lease with LINICO was terminated. As of  June 30, 2023, assets held for sale include the land, buildings and related improvements with a balance of $20,638,942. As of  June 30, 2023, liabilities held for sale include deferred proceeds and gains on sale of Facility and related equipment with a balance of $27,803,564 (see Note 7, Leases).

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. As of  June 30, 2024, assets held for sale include water rights of $730,595. 

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