The OZ Fund Restarting America’s Most Storied Mine, With Project Darwin

In this webinar, Wally Sullivan discusses the Darwin Mining / Inyoag OZ Fund, which will invest in restarting a mine in eastern California that is home to massive reserves of several valuable metals.

Webinar Highlights

  • A history of the Darwin Mine, including its previous ownership by Hearst, Rockefeller, and Anaconda.
  • Jack Stone’s history in acquiring, maintaining, and developing the mine.
  • Potential revenue sources for the mine, including precious metals (gold/silver), zing, tungsten, telluride, iridium, and limestone.
  • Macroeconomic trends that are creating strong demand for the natural resources found in the Darwin Mine.
  • ESG considerations in the Darwin Mine project, and the potential economic impact on the local economy through the creation of more than 300 jobs.
  • The accelerated timeline for resumption of mining activities and monetization of operations.
  • The unique deal terms for this OZ deal, which includes no management fee, no general partner carry, and no preferred return.
  • Q&A with webinar attendees.

Featured On This Webinar

Industry Spotlight: Darwin Mine

The Darwin Mine, located in Inyo County, California, is one of America’s most storied mines. The Darwin Mine covers more than 1,000 acres of patented claims representing a dozen large-scale mining operations. The various ores making up the Darwin mine consist of a potpourri of base metals including tungsten and zinc (both oxide and sulfide), copper, silver, and lead. Minor metal includes tellurium, germanium, indium and bismuth. 

Learn More About The Darwin Mine

Webinar Transcript

Jimmy: Next up is Javelin Securities. Wally Sullivan is going to be presenting Darwin Mining, the Inyoag Fund. So let me find Wally here. Wally, how are you?

Wally: Good, Jimmy. How are you doing? Good to see you again.

Jimmy: Good, good to see you as well. Thanks for joining me yet again. I think this is the third OZ Pitch Day in a row you’ve presented a deal on. You had the USVI Hemp Fund back in November, you had the…it was a Bitcoin mining operation back in March, I believe, and now you’re here with some sort of metals mining operation, right? From Inyo County in California. Can tell us a little more about that? I’ll turn it over to you, you got 10 minutes. Go ahead.

Wally: Thank you, Jimmy. Again, my name is Wally Sullivan. I represent Javelin Securities. Javelin is a FINRA registered broker-dealer focused on vetting and raising capital for qualified OZ projects. Today I have the pleasure of presenting a truly unique and interesting project both from a historic and a risk-reward perspective. The Inyoag OZ Funding LLC is the official name of the project that will be reopening the DarwinsMetals mining operations located in Inyo, California.

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The town of Darwin is one of the most storied mining districts in U.S. history. This area has always been known for its high-grade metals and minerals, and has attracted such mining names as the Rockefellers, Anaconda, and Cyprus. It was the largest mining operation during World War I and II, and has never stopped producing. When the Chinese flooded the markets with supply in the early ’70s and collapsed the prices of metal, Darwin was shut down along with most U.S. markets. Now fast forward 50 years, metals prices have rebounded and demand for most metals, including the nine critical minerals found in this mine, are expected to quadruple to keep pace with the clean energy technology trend. Whether you’re talking about wind, solar, or batteries, meeting our clean energy goals is not possible without these materials. It’s important that Darwin and other American mines reopen to fill this growing supply-demand gap. The U.S. can no longer rely on China and other countries with long supply lines and growing geopolitical risk for these materials. This strategic importance is reflected in the fact that some federal agencies have already signed LOIs for specific minerals in anticipation of this mine reopening.

Jack Stone is the manager of this project, and worked in the Darwin mines as a young man, and was there when it closed. After serving his country in the United States Marine Corps during Vietnam, Jack returned home and back into the mining industry. He built a successful welding business, and later a machine leasing company. He has worked in almost every mine in Western United States as well as mines across four continents. His success allowed him to slowly acquire all of the Darwin mine land patents. He then secured adequate water rights in the early ’90s, and, finally, he received all of the necessary permits to begin mining operations immediately. Impressively, he was able to accomplish all of this, and prep the mine, spending approximately $28 million, and still remain debt-free.

Multiple geologists’ reports are available on the darwinsilver.org website, indicate 100-plus years of material still to mine. This includes significant silver, copper, and gold deposits. But perhaps the most compelling part of this project is the zinc. Darwin already has tunnels dug into high-grade zinc beds. Zinc processing technology has improved in just the past decade. The demand in prices for zinc, especially liquid sulfates and oxides, has dramatically increased for the agricultural and animal feed markets especially in California. At the same time, the dominant Mexican-owned zinc supplier has indicated shrinking supply. Although the majority of the capital raised will be used for mill facility upgrades, the first $3 million raised will be spent on replacing rail, and upgrading the ventilation system so that they can begin mining the easily accessible direct ship zinc ore.

Mines often take 10-plus years to become operational. Jack’s crusher is already in place, and trucks are expected to begin rolling to the smelter within six months of this initial funding. The project will begin processing 500 tons per day in year one, and cap out at 2000 tons per day by year three. Cash flow is expected to begin within six months, and reach profitability year one. Revenues are projected to be 150 million in the first 18 months, and will scale from there.

So you’re probably asking yourself, what am I missing? Why is this project being offered to the public, and not snapped up by big industry players? Now, I’ll just ask you to think about this. For the Stone family, this project is 20 years in the making. They are hard-working, hands-on mining people that view the Opportunity Zone Program as a way to stay debt-free, and still maintain control. They would prefer to invite in equity partners to share in the upside than compromise their goals which includes revitalizing an entire community. They feel they have the experience and lifetime of connections to make this project a success. As you will see from the deal structure, their intentions are reflected in a straight equity partnership.

So here’s the deal. No management fee, no general partner carry, and no preferred return. This is a $66 million raise based on a $330 million valuation. Investors will simply receive 20% of their pro-rata share of the net profits that the mine produces, period. This will also include any subsequent revenue sources like the potential entombment business on the property. The mine is expected to have an IRR of over 20%, and an MOIC of 4.4x within five years.

Now let me touch on the topic of ESG. Mining is, in general, is not considered a clean industry. But I would describe Darwin as the cleanest shirt in the hamper. To start, this is underground mining, and is not open pit. It is located in an isolated desert area with a current population of less than 50 people. The big advantage that Darwin has over other mines is the 150 miles of existing tunnels. This allows the polluting tailings to be put back underground and mixed with some cement which is the ideal environmental solution. As a bonus, this acts to reinforce the strength of the mine infrastructure. It’s estimated that the existing infrastructure would cost close to a billion dollars to replicate. Having a dry hard limestone base represents the ideal mining environment because it eliminates the chance of water supply contamination. This is why Darwin is being targeted for mercury and entombment, and other storage business opportunities which investors will benefit from.

With regard to working conditions. Jack has already switched the locomotive to solid-state battery power, so his miners don’t have to breathe in diesel fumes all day. A dry, cool, underground environment, clean air, and good wages are powerful selling points to attract experienced labor. This project is expected to produce 350 full-time mining jobs with a 3x labor multiplier to a financially depressed area. It was the local government officials that approached the Stone family three years back, and helped get this property designated within an Opportunity Zone. Needless to say, this property has the full support of the local community.

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To expedite the initial rates, the Stone family has agreed to lower the minimum investment size to $100,000 ’til we reach the $3,000 mark, and then it will be raised. This is currently the only metals mining opportunity zone project being offered in the United States with a backdrop of inflation and expected higher taxes. This project represents an opportunity to diversify into income-producing hard assets and benefit from the rebounding metal prices all while enjoying the OZ tax benefits. If you are an interested accredited U.S. investor, please reach out to myself or the Javelin team, and we will send you the deck with financials and arrange access to securely download the fund’s PPM. We look forward to hearing from you. Thank you.

Jimmy: Tremendous, tremendous Thank you, Wally. The only metals mining operation that’s structured as an OZ deal in the United States and in right on time, too, here, Wally. Thank you for keeping on time. If you have any questions for Wally, please do use the chat or the Q&A feature right now. I guess a question for you from me, Wally. This is not a plain vanilla real estate deal, right? This has a little bit more to it than that. What would have been your biggest challenges in getting this thing off the ground, and keeping in compliance with the Opportunity Zone regulations?

Wally: Well, the one challenge we had was getting the property considered a good asset. And the way we handled that was we actually had to put the property in under a 100-year lease so that it would qualify under OZ zone rules. But other than that, we are just launching now. I’m happy to report we’ve already got a report in for someone looking to put in a million bucks coming out of the gates. And, so, we think this should be an interesting, a very interesting project especially as a unique inflationary hedge which I think some people are gonna be looking for.

Jimmy: Yeah, not a bad deal that you got from that big investor it sounds like. I hope that big-ticket comes through for you. Any concerns about non-qualified financial property? I’m not sure how metals are counted toward the asset test. Any thoughts on that?

Wally: Well, we’ve actually had some good legal advice on those topics. One of the issues is in that the state of California, you can only drill… As you can imagine, with all the prior owners of this, there’s been an awful lot of drilling here done. But you do have to be very careful in the state of California not to have your drill clusters too close together because then it becomes known as known, and you have to pay taxes on it. So this family has been very careful to keep their clusters far enough apart to avoid that. But like I said, we think this is gonna be a very exciting project.

Jimmy: And it’s certainly unique, right? I’ve never seen another one like this before. So, we have time for one more question just came in from Raj. He wants to know if you have any special tax-free distribution plans for 2026 to help with that capital gain tax liability, and any plans to pass along depreciation.

Wally: Oh, yeah. Well, you know, this is located down by Death Valley but in the state of California. Okay. So from a tax perspective, we can avoid that. It follows the same tax advantages of other OZ projects. And, again, we think, you know, at the end of a 10-year period, efforts will be made to trigger a liquidity event so that those that want to sell this investment as a tax-free exit will have that opportunity in year 11 or 12. But we actually think because of the income potential of this situation, most people are gonna stick with this trade.

Jimmy: Right. But you don’t have that liquidity event in the special distribution in 2026, correct?

Wally: No, no we do not plan on that. This is, basically, as the revenue is generated, the net profits will be distributed the same year on a straight line. We will have the advantage of depreciating all of these assets down, but following the California tax laws.

Jimmy: Perfect. All right. Well, Wally’s contact information is on the screen there, [email protected] It’s got his phone number there as well, please do reach out. Wally, thank you for presenting. Our time has expired here, but pleasure hearing from you again. You always bring the most eclectic deals at OZ Pitch Day. I really appreciate it. Gives us a lot more variety.

Wally: Thanks a lot, Jimmy. Take care.

Jimmy: Thank you, Wally.