Comstock Inc. Doubles Down on Growth with $1.45B Capex Hike, Amplifying Cash Burn and Execution Risks

What happened

Comstock Inc. has unveiled plans to boost its 2026 capital expenditure budget to around $1.45 billion, targeting a rebuild of production after a 15% year-over-year decline in 2025. This aggressive spending comes despite ongoing cash burn, with new projections forecasting $463 million in cash burn for 2026 alongside only a 5% production increase. The DeepValue report underscores Comstock's pivot to a decarbonization platform, centering on commissioning a 100,000-ton solar-panel recycling facility in Nevada by early 2026 to drive Metals segment cash profitability. However, the company remains deeply unprofitable, with negative EPS and free cash flow, relying heavily on equity raises and a targeted $50 million asset monetization for liquidity. This capex surge highlights management's high-stakes gamble to accelerate growth, but it strains an already fragile balance sheet, raising the specter of further dilution if operational milestones are missed.

Implication

The $1.45 billion capex increase signals a bold, all-in push that could fast-track Comstock toward operational scale, but it dramatically escalates financial pressure given the company's $31.7 million cash buffer and projected $463 million cash burn. This move likely necessitates additional equity issuance within 12-18 months, risking significant shareholder dilution, especially if asset monetizations fall short of the $50 million target. Investors must scrutinize the Nevada facility's commissioning and utilization ramp in early 2026, as any delays would quickly erode liquidity and validate bear-case scenarios of persistent losses. The modest 5% production increase target suggests inefficiencies in spending, casting doubt on management's ability to convert capital into sustainable cash flow. Overall, this development reinforces the 'WAIT' rating, advising caution until clearer evidence of economic viability emerges, with entry points better sought near the $3.25 attractive level to offset rising capital-structure risks.

Thesis delta

The increased capex and projected cash burn do not shift the core thesis but intensify the timeline for proving operational success. Investors must now watch for faster depletion of liquidity and potential equity raises, which could dilute shares by over 30% if losses persist. Maintaining a 'WAIT' stance is prudent, with a re-assessment needed by late 2026 based on Metals segment cash breakeven progress.