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Introduction & Market Context
Contango Ore Inc. (NYSE American:CTGO) presented its corporate update on May 15, 2025, highlighting its focus on building Alaska’s next gold mines through a portfolio of three key projects. The gold producer’s shares have been trading between $8.85 and $25.32 over the past 52 weeks, with a current price of $12.90 as of May 14, 2025, representing a market capitalization of approximately $163 million.
The company’s presentation comes at a time when gold prices have been hovering near record levels, providing a favorable backdrop for producers with competitive cost structures. Contango has positioned itself as an American gold producer with a five-year plan to reach 200,000 gold equivalent ounces (GEO) of annual production.
As shown in the following overview of the company’s strategic vision and project portfolio:
Quarterly Performance Highlights
Contango’s Q1 2025 results demonstrated strong operational performance at its flagship Manh Choh Mine, where the company holds a 30% interest alongside operator Kinross (70%). The mine, which achieved commercial production in July 2024, delivered impressive results in the first quarter of 2025.
On a 30% attributable basis, Contango reported gold sales of 17,382 ounces and silver sales of 12,770 ounces, generating total gold sales of $51.2 million and silver sales of $412,864. The company realized an average spot gold price of $2,947 per ounce and a blended Carry Trade gold price of $2,314 per ounce. Cash distributions received from the Peak Gold Joint Venture totaled $24 million during the quarter.
Notably, the company maintained competitive cost metrics with cash costs on a by-product basis of $1,334 per ounce and all-in sustaining costs (AISC) of $1,374 per ounce. These figures compare favorably to the 2025 AISC guidance of $1,625 per ounce.
The detailed Q1 2025 performance metrics and 2025 production guidance are illustrated below:
This strong quarterly performance represents a significant improvement from the company’s Q4 2024 results, when Contango reported revenue of $8.5 million, falling short of analyst expectations of $12.33 million, though it did achieve an earnings per share beat of $1.36 versus a forecasted $0.08.
Strategic Portfolio Overview
Contango’s Alaskan portfolio consists of three key projects at different stages of development, strategically positioned to deliver on the company’s growth objectives.
The Manh Choh Mine, which began production in Q3 2024, represents the company’s first producing asset. With a 30% ownership stake, Contango expects approximately 60,000 GEO in 2025, with an estimated annual production value of ~$80 million (at $2,800/oz gold) and approximately $320 million in life-of-mine free cash flow.
The Lucky Shot Mine (100% owned) currently has a resource of 110,000 GEO at an impressive grade of 14.5 g/t. Fully permitted for mining and located on established road and rail systems, the company aims to complete drilling and develop 400,000-500,000 GEO over the next 2-3 years, with a target of 30,000-40,000 GEO annual production.
The Johnson Tract Project (100% owned) represents the company’s longer-term growth opportunity with a current resource of 1.1 million ounces at 9.4 g/t GEO. Contango aims to complete permitting in 2 years and achieve production within 5 years, targeting 100,000 GEO annual production. The project boasts attractive economics with a post-tax NPV5 of $224.5 million and a 30.2% IRR, with a 7-year life of mine and a 1.3-year discounted payback period.
The geographic distribution and development status of these projects are illustrated in the following map:
The company’s Lucky Shot project represents a significant near-term growth opportunity, with high-grade resources that could substantially increase Contango’s production profile:
Competitive Industry Position
Contango has positioned itself favorably among its peer group in terms of both projected cash flow and production costs. The company’s projected annual operating cash flow per share for 2025 is approximately $3.00 (adjusted for hedge losses), which compares favorably to peers such as MAG Silver (NYSE:MAG) ($1.60/share) and Jaguar ($1.08/share).
The company’s competitive position is illustrated in the following comparison:
Similarly, Contango’s all-in sustaining costs (AISC) of $1,400 per ounce position it competitively within its peer group, where costs range from $866 to $1,987 per ounce:
The company’s direct ship ore (DSO) approach at Manh Choh has proven successful, allowing for rapid development from joint venture formation to production in just three years. This model avoids significant capital expenditures associated with mill and tailings facility construction, as noted by CEO Rick Van Duenheiser in the company’s recent earnings call.
Forward-Looking Statements
Contango has provided detailed guidance for 2025 and beyond, with sensitivity analyses for different gold price scenarios. At the current gold price environment of approximately $2,800 per ounce, the company projects significant cash flow generation from Manh Choh.
For 2025, Contango expects to produce approximately 60,000 ounces of gold equivalent from its 30% stake in Manh Choh, with AISC guidance of $1,625 per ounce. The company’s remaining hedge balance stood at 74,800 ounces at the end of Q1 2025.
The company’s financial projections under various gold price scenarios are detailed below:
Looking ahead, Contango aims to be debt-free and hedge-free by the end of 2026 or early 2027, having already reduced its debt from $60 million at the start of 2024 to $38 million currently. The company projects to finish 2025 with approximately $15 million in debt.
With its three-project portfolio in Alaska, Contango is executing a clear strategy to build a mid-tier gold producer focused on high-grade, low-cost operations. The company’s unique DSO approach, proven successful at Manh Choh, provides a template for future development at Lucky Shot and potentially Johnson Tract, positioning Contango to achieve its five-year goal of 200,000 GEO annual production.
Full presentation:
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