Earnings call transcript: Contango ORE Q2 2025 sees profit turnaround

Contango ORE Inc. (CTGO), with a market capitalization of $263 million, reported a significant turnaround in its financial performance for the second quarter of 2025, posting operating earnings of $23 million compared to a $3.1 million loss in the same period last year. According to InvestingPro data, analysts maintain a bullish stance on the stock with a consensus recommendation of 1.8 (where 1 is Strong Buy and 5 is Strong Sell). The company’s net income reached $16 million, a stark contrast to the $18.5 million net loss recorded in Q2 2024. Despite this positive performance, the company’s earnings per share (EPS) of $1.24 fell short of analysts’ expectations, which had forecasted a loss of $0.0367 per share, resulting in an earnings surprise of -3478.75%. Following the earnings release, Contango ORE’s stock price saw a 3.78% increase to $21.7, although it later declined 4.15% in premarket trading.

Key Takeaways

• Contango ORE reported a return to profitability with $16 million in net income.
• The company’s EPS of $1.24 was significantly below the forecasted loss of $0.0367.
• The stock price initially rose by 3.78% but fell by 4.15% in premarket trading.
• Gold revenue reached $58.2 million, supported by a favorable gold price environment.
• Future guidance includes a focus on underground development and reducing debt.

Company Performance

Contango ORE demonstrated a robust recovery in its financial results for Q2 2025, transitioning from a loss to profitability. InvestingPro analysis reveals the company maintains a Fair overall financial health score, with particularly strong momentum metrics. Subscribers can access 12 additional ProTips and comprehensive financial analysis through the platform’s detailed research reports. The company capitalized on a supportive gold price environment, achieving $58.2 million in gold revenue. This performance underscores its strategic focus on low-capital, infrastructure-adjacent projects, which have positioned it uniquely within the junior mining sector.

Financial Highlights

• Operating earnings: $23 million, up from a $3.1 million loss in Q2 2024.
• Net income: $16 million, compared to an $18.5 million net loss last year.
• Gold revenue: $58.2 million.
• Operating cash flow: $36.9 million for the first half of the year, up from $6.9 million last year.
• Realized gold price: $3,274 per ounce.

Earnings vs. Forecast

Contango ORE’s actual EPS of $1.24 was a significant miss compared to the forecasted loss of $0.0367, resulting in a negative earnings surprise of -3478.75%. This discrepancy highlights the volatility and unpredictability in the company’s earnings performance relative to market expectations.

Market Reaction

Following the earnings announcement, Contango ORE’s stock price increased by 3.78% to $21.7. The stock has shown remarkable momentum, gaining over 111% in the past six months and trading near its 52-week high of $23.95. In premarket trading, the stock fell by 4.15% to $20.8. This fluctuation reflects mixed investor sentiment, influenced by the earnings miss despite the company’s return to profitability. The stock remains within its 52-week range, with a high of $24 and a low of $8.9.

Outlook & Guidance

Looking forward, Contango ORE aims to produce 60,000 ounces of gold in 2024 while targeting all-in sustaining costs below $16.25 per ounce. Analyst targets range from $26 to $34.8 per share, suggesting potential upside. InvestingPro subscribers can access detailed valuation models and comprehensive financial metrics to better evaluate the company’s growth potential. The company plans to reduce its debt to $15 million by year-end and decrease its hedge book from 63,000 to 43,000 ounces. Strategic initiatives include underground development at the Lucky Shot and Johnson Track projects, with a potential resource estimate of 400,000 to 500,000 ounces at Lucky Shot.

Executive Commentary

Rick Van Nunez, CEO, emphasized the company’s growth potential, stating, "Once we get free of the hedges, this is a rocket ship." CFO Mike Clark highlighted a cautious approach, noting, "We’re not going to swing from the fences and make any big bets here." Van Nunez also expressed ambitious goals for the company’s stock price, saying, "My objective is I’d like to have a three-digit stock price someday."

Risks and Challenges

• Market volatility: Fluctuating gold prices could impact revenue. InvestingPro data indicates the company operates with a moderate debt level of $48.5 million and faces liquidity challenges with a current ratio of 0.47, suggesting short-term obligations exceed liquid assets.
• Operational risks: Maintaining high gold recovery rates and managing the truck fleet’s replacement.
• Regulatory hurdles: Permitting progress for the Johnson Track project.
• Financial risks: The need to manage and reduce debt levels.
• Competitive pressures: As a junior producer, the company faces challenges from larger, more established mining firms.

Q&A

During the earnings call, analysts inquired about the company’s hedging strategy, permitting progress for the Johnson Track project, and the potential monetization of OnEx shares. Executives confirmed there are no immediate plans for dividend distribution, underscoring a focus on growth and debt reduction.

Full transcript - Contango ORE Inc (CTGO) Q2 2025:

Romeo, Moderator/Host: In the world you’re signing in from. I saw today we got all the way from Alaska to Australia, I’m happy to say the sun never sets on this webinar, which is always nice. I’ve got with me today, Rick Van Nunez, CEO of Contango Ore, and the company’s CFO, Mike Clark. Gentlemen, how are you today?

Rick Van Nunez, CEO, Contango Ore: Good morning, Romy. How are you doing?

Romeo, Moderator/Host: Good. Good. So here’s how today’s gonna work for everybody that’s in the room. First, I’m gonna throw it to Rick just to recap their recent news. Then I’ve got some questions that I’m gonna ask both the executives, but then I’m gonna throw it to the live audience today for questions that you have.

This So is an interactive event, that chat button in the bottom right of your screen. Can use at any point during today’s event to ask Rick and Mike any questions that you might have. I’ll try to get to as many as possible. If for whatever reason I don’t get to your question, I’ll make sure the Contango team gets to it, and they’ll get back to you as soon as possible. Only other piece of housekeeping is that today’s event is being recorded.

The replay will be available late this afternoon eastern time. It should come right in your inbox, but also available on SYKES YouTube channel. So I will throw it to start off, get the protein at today’s event with Rick.

Rick Van Nunez, CEO, Contango Ore: Romeo, thanks, and thanks everybody for joining us for a review of our Q2 financials. It was a great quarter. Operating earnings were $23,000,000 net income about 16,000,000 I’m really proud of our cash costs in those being well under guidance. Cash costs for the quarter were $14.16 for the year, 13.75. Our all in sustaining costs, dollars $15.48 for the quarter, and 16 or sorry, $14.62 year to date.

We’ll talk about JT. We’re focused on permitting there. This is a Johnson Track project. That’s going well. Very pleased with the progress we’re making there.

Lucky shot is still on hold, but we are looking at getting a drill program going there. We’ll talk more about that with some of the Q and A, I think. And again, we’re kind of on a steady path here, focused paying down debt, delivering the hedges. And today, actually, third campaign of batch processing ore at the Fort Knox mill starts. There’s about 250,000 tons, quarter million tons on the pad at Fort Knox, and it grades about 0.23 ounces per ton, which is about seven grams.

So just with that sort of overview, happy to just jump into the question, Pramio.

Romeo, Moderator/Host: Awesome. Well, I got a bunch, so bear with me while I grill you guys for a little bit. I do want to start with the numbers that kind of jumped right off the page for me. So obviously, you went from 3,100,000.0 operating loss in Q2 of last year to 23,000,000 operating income this quarter. Always nice to see.

Most mining companies I talked to don’t see money, so it’s always nice to see that. In addition, the company had net loss in Q2 of last year of $18,500,000 now net income of 15,900,000.0 So beyond obviously increased gold production, what initiatives are contributing here? What’s making that big change?

Rick Van Nunez, CEO, Contango Ore: Well, as you say, it’s not common to see a junior company, a junior producing company making more money than spending. And so it’s definitely a sea change in terms of how I think how we’re viewed by the market. We were I was actually wearing a shirt the other day. It was from our when the groundbreaking ceremony from 08/29/2023. So we’ve been mining now at Montserrat for two years, close to, and been in production.

We started production, of course, in July. So we’re kind of up on step in terms of if you drive a boat, ultimate way to get a boat operating smoothly is to get up on step. And that’s kind of the way I feel the project is now. The mining has been very smooth and on plan, on schedule, on budget. The transport has gone better than planned in terms of not as many shutdown days due to weather and things like that.

The lawsuit has gone away. So the last piece of the puzzle is running the ore through the mill, and they just continue to make nice improvements, and we’re averaging 92%, 93% recovery, which is very respectable. We’re maintaining that mix of oxide, sulfide, or two:one ratio, and that keeps the recoveries in the plus 90%, which is, again, very respectable. And that means you’re pouring gold and you’re making money and nice to see the all in sustaining costs coming in well under guidance. And that’s obviously the lower the all in sustaining costs are, the higher the margin on the realized price of gold.

So Mike, maybe you want to maybe comment from your perspective.

Mike Clark, CFO, Contango Ore: Yes. No, no, that was a good explanation. I think just, yes, on the income from operations, they weren’t in production in the 2024, whereas we have a production here. So that’s purely driven by production. I think the net income has increased for two reasons.

Last year, we were in a continually increasing gold price environment. So you kind of always had these unrealized losses on your hedges, your derivative contracts, which kept increasing our losses during the period. In addition, we also and that stabilized during this quarter. So you didn’t really see that happen. We just kind of recognized the recognized portion from delivering the hedges.

So no real unrealized portion. In addition to that, we did have a $6,400,000 gain on our On X shares that we recognized in the quarter. So those 5,000,000 shares we acquired as part of the High Volt acquisition. So those kind of hit the net income this quarter.

Romeo, Moderator/Host: Great. I want to while I’m on with you, Mike, actually, I know earnings per share jumped from a loss of 1.9 to profit of $1.24 per diluted share. And it looks like $3,274 per ounce realized spot price versus that blended carry trade of 24.41 So I’m curious if you can just like looking for some color on your pricing strategy and how that contributed to the bottom line this quarter.

Mike Clark, CFO, Contango Ore: Yes. Well, the hedging strategy, for the most part, is just delivering the hedges. And so if you deliver effectively about 70% of our gold goes into the hedges, 30% goes into the spot price during the year. And so when you look at the average gold price during the quarter, let’s just say it was $3,300 and our hedge price is $2,000 you kind of end up with a blended price of about $24.5 The carry trade we brought in this year, which just helps us manage our cash flows so that when we receive our deliveries of gold from the Peak Gold JV, we can turn around and sell it at spot price at 100% of the spot price, pay the Peak Gold for that gold, which comes at a slight discount, which is why you see about $1,000,000 gain on metal sales each quarter. That’s that slight gain we make.

So we sell that gold at spot price, banks effectively fund that, that difference between the $3,300 and the $2,000 And then when the hedge delivery date comes up in the next quarter, we then can deliver into the we basically settle that hedge right then. So it allows us to conserve our cash. In Q1, we made a rising gold price. We actually saved a couple of million dollars by doing that carry trade. I think in this quarter, it cost us a couple of $100,000.

But it basically ensures we take no risk on the gold price moving in either direction. It limits any exposure because what we don’t want to have the gold price, we sell it at say $3,000 and that when we have to deliver or settle that hedge, it’s at $3,500 We’re out $500 in the house and that could put us in a really tricky position. So this just manages risk. And that slight difference gives us about $1,000,000 gain per quarter.

Romeo, Moderator/Host: Okay. Makes sense. I want to get into operational details real quick. So Rick, I’ll throw it to you. I know this third campaign is processing 250,000 tons at 0.23 ounces per ton, which for the metric folks now is seven grams per ton grade.

So I’m curious, how does this compare to your Q2 performance of 255,000 tons of 0.22? And what’s driving that grade consistency at Mancha? Where does that come from?

Rick Van Nunez, CEO, Contango Ore: Yes. So Amit really is, I think I mentioned it earlier, the mill likes to run with this twothree, onethree ratio of oxide to sulfide. And oxide ores are easier to process, they just consume less consumables and things like that. As you add, as you get deeper in the ore body, you’re adding more and more sulfide. But we’ve got a big low grade stockpile that we can, of oxide that we can kind of keep feeding in there.

So that’s what’s kind of driving the grade. Now we are in the process, and I’m using the Royal Weed here, Cinderess again is the manager and it’s their mill. But they’re in the process of adding an oxygen sparging circuit to the cyanide leach tanks. And what oxygen is just kind of a, it acts as a bit of a catalyst to help the reactions go. The sulfide ore is a very good performing sulfide ore in terms of extracting the gold from the cyanide solution.

It’s not the least bit refractory. But sulfides do consume more consumables, and so the oxygen just helps get that going. And so they’re putting an oxygen sparging system in place, which I think should be up and running by the end of the year, but I think ready to sort of put it into performance. As we get deeper in the ore volume, we have more and more sulfide. And at some point, we’re not going to maintain that two:one ratio and maybe deplete the oxide.

So that’s kind of operationally what’s going on. So there’s a bit of capital obviously to put the oxygen system in place and some of that is showing up in the capital expenditures. And then the other part of the operational thing is these trucks the trucks hauling the ore have over a million miles on them now. So we have to start replacing them. And it’s amazing after a year, a couple of years of mining operation, you’re starting to replace your trucks.

But those are things that show up in the all in sustaining costs because they’re capital that are spent on operations. Don’t Mike, if you have anything to add to that.

Mike Clark, CFO, Contango Ore: No, that’s how I would explain it.

Romeo, Moderator/Host: Perfect. I want to get into cash flow and capital allocation for a second. So I know generating $36,900,000 in operating cash flow for the first half versus $6,900,000 last year. But with $30,000,000 in Q2 distributions from Peak Gold’s, 54,000,000 year to date, how are you guys balancing debt reduction? I know you’ve paid down $29,000,000 so far, but what’s the plan on debt reduction versus reinvestment in growth projects?

Just looking to get in your head on that.

Rick Van Nunez, CEO, Contango Ore: I’ll let Mike go first and then Mike throw in after.

Mike Clark, CFO, Contango Ore: Yes. Well, focus is ensuring I can always meet those delivery dates so that the debt comes every quarter, hedge deliveries every quarter. So the focus right now is we make we have sufficient capital to ensure that we can make all those payments through the maturity with currently for 2025, there’s some extra cash we had this year and our focus has been on the permitting at JT. So with what we’re anticipating, which I expect we’ll probably do slightly better, we’re going to bring our debt down from where it currently is at about $23,000,000 today. We’ll finish the year around 15,000,000 of debt with ING and Macquarie.

And then our hedge position is currently at, as of today, it’s just under 63,000 ounces and we should bring that down by another 20,000 ounces to about 43,000 by the end of the year. So that’s the main focus of the proceeds we have, which is where the majority of cash goes. But we do keep a little bit aside for other projects. And I’ll pass it to Rick.

Rick Van Nunez, CEO, Contango Ore: Yes, I’ll just kind of comment from an operational standpoint. We do want to advance our other projects. I think we’ve said very consistently the next stage for JT is getting the permit to go underground and that’s, there’s not really anything to do. We want to spend exploration dollars on early stage, relatively early stage projects to add more ounces. We know we have a high quality deposit that makes a lot of money that has very high NPV at today’s gold price.

It’s just not prudent to start or restart exploring the Ellis cylinder or number of the other Milko or any these other targets that are out there. We know we’ve got a very prospective piece of ground at JT. So next stage, get the permits, that’s going very smoothly. We have a good working relationship with the state of Alaska. These permits, the underground mining permit is at the state of Alaska, technically sort of two main permits we need from the Department of Environmental Conservation, and that’s a water discharge permit and then the mine operating work.

Technically, it’s a mine. We’re not producing anything, but you’re still filling a hole in the a big hole in the ground, a long hole in the ground. So let’s go to the JT. And look, at Lucky Shot, we do want to get a program going and get back underground and start drilling again, but I don’t want to do it in sort of fits and spurts. And so that’s why we keep saying that the focus is on delivering the hedges, reducing the debt.

And when we see sort of a clear window of being able to start and then not stop going at JT sorry, at Lucky That’s kind of what we’re looking for. So be patient. It’s not steamed. The gold is not going anywhere. Gold price keeps going up.

So we once we get underground and get to it at Lucky we can advance things pretty quickly. So I’m not really too worried about the overall timeline there.

Romeo, Moderator/Host: Great. Got two quick questions on while we’re on the topic of Johnson Tracks and Lucky Shot. For Johnson Track, thanks for going through the upcoming milestones, think that’s great. What tonnage potential are you targeting at Johnson Track?

Rick Van Nunez, CEO, Contango Ore: So we have the initial assessment we did, which is the again, the term is the SK1300 uses same as the 40 three-one 101 in Canadian lingo, targeted a 1,500 ton a day operation. Is, JT, So, mean, it’s a good grade deposit, but it’s also just a nice geometry of the deposit from a mining standpoint. It’s a pain in the butt to drill because it’s you got the mountain that’s going straight up and the ore deposit that’s going straight down. So your drill holes get long and the depth is such that you have to drill parallel to the mountain surface, that’s not a good thing to do. So that said, from an exploration standpoint, it’s not the greatest geometry, but from a mining standpoint, once you’re underground, great geometry.

It’s a big fat ore body and it’s near vertical. So you have, from an underground mining perspective, relatively, you’ve got good long hole stoves that you can develop. And all of our infrastructure is in unmineralized material, what we call the bay site porphyry. It has like zero sulfides in it, and so it’s great rock to put all your underground development in because the water is very clean. The big fault that separates the mineralized from the unmineralized is an aquatard or an aquafood.

So the water mineralized water that that is tainted stays on one side, and you just you just keep the water separate. You put a grout curtain up if you need to, and and you you you can develop the ore body from an environmental standpoint very cleanly and not have a lot of concerns about the water contamination. So

Romeo, Moderator/Host: Great.

Rick Van Nunez, CEO, Contango Ore: Of nature is doing that on our own right now. That’s that’s how we find these deposits. They’re, you They’re metal anomalies, which means there’s metal going into the creeks. We just don’t want to touch it because once we touch it, it’s our water.

Romeo, Moderator/Host: Fair enough. Fair enough. I got one question about Lucky Shot as well. I noticed you mentioned a royalty acquisition of an existing 0.5% NSR for 250,000 Just what does this mean for me and the folks in the room?

Rick Van Nunez, CEO, Contango Ore: Yes. So as we work towards transitioning Lucky Chef from an exploration project to a mine, and that’s getting the drilling done. But obviously, we see that as all moving forward we get the right time, and that’ll be, let’s get the hedges out of the way and things like that. This is, if we can buy a royalty for a good value, that means we don’t have to pay it to, when we’re in production, don’t have to pay that royalty to somebody. So it’s pretty valuable to have that.

And we’ll basically just extinguish it because we’ll own it. So there’s no sense of paying it to ourselves. That’s just paperwork. And Mike’s got plenty of that. Yes, don’t read it as we’re becoming a royalty company sort of thing.

That’s not the intent. It’s just if we can buy out the underlying royalty owners and pay them good value, good value for them because they get the money upfront. They don’t have to be getting worried about any of the ongoing risk, operational risk and what have you. That just makes sense to us.

Romeo, Moderator/Host: Great. While we’re on Mike’s paperwork, actually, do have a question for you. I’ll talk about carry trade mechanics. So I know you reduced your hedge book from 74,800 to 62,900 ounces or somewhere around there. Curious, what’s your philosophy on the optimal hedge ratio as production progresses?

Mike Clark, CFO, Contango Ore: Well, the optimal hedge ratio doesn’t really change. It all mirrors what was in the original feasibility study, And that’s how the lenders structured it. And unfortunate for us is it got structured in a way that has it does things in quarterly on a quarterly basis, but we don’t deliver gold on a quarterly basis. We deliver it on a monthly weekly basis, if Some weeks are bigger while we’re in the middle of a campaign, whereas some are small, but there’s a delivery every week. So the objective I try to do to again limit risk, ensure that I have enough gold by the time that delivery is due is when a campaign starts, you kind of have some you have a couple of weeks when it starts where you’re waiting for that first big shipment.

But when that first shipment comes, we deliver 100% of that gold into the carry trade and that carry trade will finish fill that next hedge delivery up within the first three shipments usually. And then for the final two shipments, I’ll sell those at 100% of spot price with no carry trade. So we’re always ahead of the hedge delivery. And in the rising market, it works well obviously. But if the gold price starts to dip, there’s a small hit.

But this just ensures we’re never going to be short delivering that gold and forced to buy in the open market at a month later when gold price could swing again. So that’s kind of my approach, right or wrong, I guess, but it’s worked so far.

Romeo, Moderator/Host: No, helpful. Appreciate it.

Rick Van Nunez, CEO, Contango Ore: The objective is to have real hedges and have full exposure to the gold upside or downside. Mean, obviously, what we don’t want to do as a junior company is try to play or gain the market on guessing where gold is going. That’s just not the role of a junior mining company. Equity owners of Contango should want us to make bets, I mean, go to Vegas.

Mike Clark, CFO, Contango Ore: Yes. When we have a stronger balance sheet, Romeo, we would take a more sophisticated approach to this. But while we’re at these levels and managing the lenders, it’s all about just removing the risk and trying not to take any big swings for the fences at the cost of being long.

Romeo, Moderator/Host: Yes. No, I appreciate your take on that. Rick, I’m hoping and I know there’s a lot of questions in the chat, I’ll get them just in a second. I want to zoom out for a second. With $58,200,000 in Q2 gold revenue, you’ve emerged as a mid tier gold producer.

And I’m curious how you see contango in that class compared to other mid tier gold producers, especially with rate cuts supporting potential rate cuts supporting higher gold prices? Where do you see Contango fitting in with the club?

Rick Van Nunez, CEO, Contango Ore: Well, mean, we’re a junior company. I’m not sure we’re mid tier yet. I would actually describe us as junior producer. But we’re again, we’re making more money than we’re spending. And that’s unique.

If you look at most other junior producers, that’s not the case. And that’s delivering into our hedges. And so once we get free of the hedges, this is a rocket ship. So that’s and that’s where aiming to. We’re going to do that prudently.

Again, we’re not going to as Mike just said, we’re not going to swing from the fences and make any big bets here. But we do believe in the gold price. If you don’t, you shouldn’t be in the gold business. And we’re hedged because the bank’s made its hedge. It wasn’t part of the strategy.

And so that’s just the way it works for a junior company. I think in terms of where we fit in the gold space, I can’t think of another junior company producing and making money selling gold that only has 12,000,000 shares outstanding. So we’re definitely a bit of a unique beast. Our model is unique. We see a few other wannabe copycats out there saying they’re going do a DSO thing.

I think it’s a great model. So hats off and if they can make it work, that’s great. We’ve made it work. So we know it works. And it’s really all about the assets.

I mean, the assets have to have those three criterias that we talked about. They’ve got to have grade. They’ve got to be close to infrastructure so you don’t have a huge amount of capital to get it done. And they’ve got to be relatively simple projects from a permitting standpoint, so you can get them done quickly. Obviously, of that, then the capital is not as high as if you were going to build your own mill and all that.

When I look back at Mancho, and we had a study that said basically it was going to cost $500,000,000 to build our own mill and develop the project there. And the market just doesn’t support that. It’s just too small of a deposit. It’s high quality, but it’s just small for the market to say, well, we’re willing to risk $500,000,000 of ours, whether it’s debt or equity, to let a junior startup make a try to get this into production. There’s more belief if you have a 5,000,000 or 10,000,000 ounce deposit that that will eventually work because frankly, it doesn’t, one of the intermediates or majors will come along and fix it.

Romeo, Moderator/Host: Yes, sure.

Rick Van Nunez, CEO, Contango Ore: After it’s gone down to the trash heap.

Romeo, Moderator/Host: That is usually how they operate.

Rick Van Nunez, CEO, Contango Ore: And I mean, market’s littered with junior wannabe startups that said we’re going to develop our 10,000,000 ounce gold deposit, and they don’t. Maybe Newmont or Barrick does eventually or somebody else. But yeah, we don’t want to be one of those. So we’re going to stay prudent and we like our low share count. We’ve been told several times we should just roll it forward 10 to one or something like that and be happy with the $2 stock.

No, my objective is I’d like to have a three digit stock price someday.

Romeo, Moderator/Host: There you go. And somebody in the chat actually agrees with you. They posted near the beginning of the hour. They see the stock at $100 So there you go. They say they’re printing money, the model is brilliant.

Somebody in the chat agrees with Curious as we jump, just before I get to those chat questions, when are you going to provide guidance on the 2026 production at Munsho? And just generally, what are the upcoming catalysts for Contango?

Rick Van Nunez, CEO, Contango Ore: Yes. So guidance on ’26, typically the plan and budget’s approved in November timeframe. So we won’t really see anything definitive other than the general like of mine kind of guidance that we also give out. But yes, and I think we’re going to stick to the plan. I mean, is Kinross.

Kinross, they don’t swing from the fences either. They’re, you know, they’re going to keep it on the straight and narrow. Look, I mean, the mining is going smoothly, the hauling is going smoothly, and the mill’s dialed in. So steady as they go. Fort Knox has never looked better as an operation from Kinross’ perspective on their financial disclosures.

So if they’re happy, we’re happy.

Mike Clark, CFO, Contango Ore: There you go.

Romeo, Moderator/Host: Perfect. Let me get into some of the questions in chat. So Tate Sullivan, right at the beginning of the hour, asked how long will campaign three last and potential timing of the check from the JV?

Rick Van Nunez, CEO, Contango Ore: So campaign is roughly three weeks. And Mike, probably ought to comment on when you Yes.

Mike Clark, CFO, Contango Ore: I would expect that distribution should come in late September is my best guess. It’s usually kind of right near the end of the campaign when they’re 80%, 89 done.

Romeo, Moderator/Host: Great. C. W. Donahue from the chat asks, for Johnson Track, is there still a beluga whale lawsuits issue? Where is the status of that?

Rick Van Nunez, CEO, Contango Ore: Yes. So the Center for Biodiversity and Cook Inlet Keepers filed a lawsuit against the U. S. Army Corps of Engineers for granting our four zero four permit last year. And so basically, it’s in federal court.

We have one federal judge in Alaska. We’re supposed to have three. Congress hasn’t appointed any of Trump’s federal judge appointees. That’s a DC, I can’t say that on the air, but that’s DC’s, that’s a swamp issue. And so she has five fifty, our loan federal judge has five fifty cases to hear.

So basically, yes, the lawsuit is filed and we’ve weighed in enjoying the lawsuit and that’s the status of it. So that’s I comment can’t much more than that.

Romeo, Moderator/Host: Perfect. One question in the chat and I’ll throw on a little bit addition myself. I asked, what allowed I know we already touched on it, but just for clarity, what allowed the ASIC for second quarter to be lower than expected? And my addition, how are you tracking generally towards the sub-sixteen 25 target?

Mike Clark, CFO, Contango Ore: You want me to start this one, Rick?

Rick Van Nunez, CEO, Contango Ore: Yes, go ahead, Mike.

Mike Clark, CFO, Contango Ore: Yes, so well, as you know, in Alaska, the weather gets much nicer in the summer. So at the beginning of the year, you didn’t have much exploration going on and we just hadn’t planned to be purchasing many of the trucks at that time. Q1 was very low. Q2 came in lower than I guess internal guidance, even though we kind of delivered on purchasing these trucks during the quarter and the expiration. So it obviously increased from Q1 to Q2, it went up.

And we expect Q3 to be consistent with Q2. It could actually be a little bit less just due to how much time we’ll be doing

Rick Van Nunez, CEO, Contango Ore: the quarter. Because if we’re not

Mike Clark, CFO, Contango Ore: doing our campaign, that means Fort Knox is doing theirs. And the least amount of time we spend in a quarter on our campaign, it really impacts our processing costs and our admin costs that we have there. So I expect the costs to be consistent because we still have exploration, we still have truck purchases happening during this quarter. So I think you’re going to see expect you’re going to see AISC kind of stay consistent, but I do think what we will come under hopefully by the below the 1625 just based on how we’re tracking. Fourth quarter will be slightly should be slightly higher just due to the size of that planned campaign.

So you might see it creep up a little bit in Q4, but we do definitely hope and plan to come in below 1625. Rick, anything to add?

Rick Van Nunez, CEO, Contango Ore: Yes, think, yes, mean, in general, we get more, like I say, weather days, both in terms of truck transportation traffic in the wintertime, obviously, you get blowing snow and things like that to slow things down. If it’s super cold, that slows things down. And then you can, if gets really cold and there’s ice in the stockpile, that slows the mill down. So those are kind of the sensitive points, and they all occur in the wintertime, which is not too surprising. Summertime is kind of a breeze, but we do have these capital expenditures that you do tend to do in the summertime, which is exploration and buying and putting orders in for trucks and things like that.

Mike Clark, CFO, Contango Ore: The other item I’ll add is, is always a function of your ounces sold during the year. And so far, we are tracking kind of slightly ahead of our guided production of 60,000 ounces for the year. So for every ounce more than what we guided, that’s going to bring down your cost because it’s a fixed cost driven operation. That all those factors when you put them together, that’s why we kind of expect we’ll come in under, but we’ll see how we get at the end of Q3.

Rick Van Nunez, CEO, Contango Ore: So, again, they’re going to have guidance that they’re going to meet or beat.

Romeo, Moderator/Host: Great. Steady reliable good news that I don’t get a lot of this in mining industry. SK from the chat, three questions, so I’ll throw them to you one at a time. Are there plans to monetize the Onex shares?

Rick Van Nunez, CEO, Contango Ore: Short answer is yes. It’s more about timing. We like what they’re doing. And so we’ll be patient. And obviously, we have a good working relationship with Onex and the people at Onex.

So we’re not going to torpedo them at all.

Mike Clark, CFO, Contango Ore: And then the only thing I’d add to that is some of those shares are still under escrow from when they were originally issued to Highgold. And then we’re also in kind of a lockup on what we can do with them. So they’re it’s not as easy as just saying we’re going to sell them, but we are we’re obviously going to consider what options are out there and watch closely.

Romeo, Moderator/Host: Great. It also asks, know that as we go into conference season, what’s the message for 2026? What are you be telling folks at the conferences in September, October?

Rick Van Nunez, CEO, Contango Ore: Basically, a lot of it’s going to focus on drilling underground at JT sorry, Lucky Shot and getting underground started at JT. We’re already, we’re working on the road. We’ve been doing some grubbing and things, just getting things ready to get underway in earnest next year. So obviously, continuing steady as she goes in terms of delivering the hedges and reducing the debt and freeing up cash flow to advance or aggressively advance our other two projects. Mean, those projects, what we envisioned for Lucky Shot is a mine resource in the four hundred five hundred thousand ounce range with the, once the building’s completed, and a mine plan that can deliver on startup 30,000 to 40,000 ounces at really good margins.

Because again, the grade is, on a mine diluted grade, it’s going be above 10 grams. And we’ve got the rail there. I just had a conversation with the head of Alaska Railroad earlier this week. They’re eager to, you know, look at transporting our ore in in boxes. Again, from a mining standpoint and a transportation standpoint, very simple plan.

About to take advantage of the railroad, it’s a third of cost of trucking. So every mile or kilometer we can put on a rail car is less. Then we’ve got, we’re still evaluating where Lucky Shot ore would go, number of options there. And then meanwhile, get started on getting the underground progressed at JT. Again, rough numbers, it’s about a year to get the underground, that’s a kilometer and a half of underground to get built, to get set up to do the drilling.

The And other thing about Johnson Track, mean, it’s already, you know, with the roughly million ounce gold equivalent resource there at nine, you know, nine and a half grams, that’s a great deposit. It’s open at depth, and we just can’t drill at depth because of the geometry. So once we get underground, we can drill at depth, and we can see, you know, is it is it one and a half million ounces? Is it 2,000,000 ounces? It’s it’s more than a million ounces, so we know it’s open.

So I’m very excited about, you know, getting underground, getting the information to work underway.

Romeo, Moderator/Host: Great. That’s a good story for Beaver Creek in Denver. They also asked, is there any thought been given to getting into ETFs like the GDXJ?

Rick Van Nunez, CEO, Contango Ore: Mike, do want to take that or I guess to be determined, mean, I’m not frankly surprised we’re not on it. I guess that would be my response. We’re part of the Russell two thousand, that’s a much bigger index. Or I shouldn’t say bigger, broader. It’s not gold specific, obviously.

Probably something we ought to take a look at it because I’m a bit surprised we’re not in it.

Romeo, Moderator/Host: Yes. And I said the same thing in the comments. It makes no sense that producing junior miner isn’t in the largest pass ETF, so something interesting. Somebody with a very colorful username asks, could we expect the same earnings for the next few quarters if gold stays in this range all year?

Mike Clark, CFO, Contango Ore: I guess I can start. I think Q3 will be consistent with Q2. I think Q4 might drop off a little bit. But Q4 will basically summarize the whole year and keep us we plan to have that kind of in line with our guidance that we had for the year. But I think Q3 for sure, if not better.

Romeo, Moderator/Host: Great. And I will ask you guys one last question, which should give everybody in the chat a chance to ask their last questions before we wrap. Just curious, what are you most excited for, for the rest of the year? Rick, I’ll start with you.

Rick Van Nunez, CEO, Contango Ore: I’d say it’s just I hate to say steady as she goes, but it is kind of that. And what I really would like to figure out is to get underground at Johnson Track and get the sorry, get underground at Lucky Shot and get the drills turned. Drilling is exciting. And it’s a great deposit and it’s very simple. We like simple.

So the sooner we can get underground and start drilling once we’re underground, we can keep going. But I don’t want to make I don’t want, like I said before, I don’t want to start and then have to stop because we’ve the hedges are gold prices have gone down and we’re scrambling for money and stuff like that. It’s just we want to make sure we’ve got kind of a clear path here. As I said, it’s not steam, so it’s not going anywhere. And we’ve got it still fits our five year plan.

Romeo, Moderator/Host: Mike, what keeps you buzzing for the rest of the year?

Mike Clark, CFO, Contango Ore: It’s pretty boring answer, but I guess my response is just to kind of continue to like steady as she goes delivering these ounces delivering hedges and pay the debt down, but to actually see our balance sheet delever and come down and bring the liabilities down like that’s kind of what excites me, which is kind of a

Romeo, Moderator/Host: boring answer. It’s pretty answer. A tough

Mike Clark, CFO, Contango Ore: But that’s kind of what I think by the end of this year, it’s going to be a very impressive balance sheet and with strong earnings.

Romeo, Moderator/Host: Awesome. One last question from the chat and I know you might be bored of this question because I’ve asked you I think on six webinars in the last year. But are there plans in the future to reward shareholders with the dividend?

Rick Van Nunez, CEO, Contango Ore: Yes, again, love that thought. It’s definitely not of this year and probably in all honesty, not a next year thing. But yes, I mean, is definitely one of the things we’re focused on is delivering shareholder value and having a low share count is part of that. And whether in the end, if it ends up being a dividend or share buyback, those are things that longer term, we definitely want to grow the company. We definitely believe in the gold price.

We are looking at other opportunities. I think I mentioned before, we’re looking at we want to find a home for Lucky Shot and JT Ores, and we’re looking at a number of options there. So kind of stay tuned to that space. We’re under CA with a number of groups, we are definitely that’s a bit of a longer range plan. But if we can achieve our five year plan of producing, getting Gay T and Lucky Chai into production and getting up to a 200,000 ounce a year production profile and keep our share count low.

I mean, again, that’s a rocket ship. So that’s what we want to build here.

Romeo, Moderator/Host: Awesome. Well, on that note, I’ll wrap up for today. Rick, Mike, thanks so much for running through questions and talking with last quarter. Everybody in the chat, thank you so much for participating, everybody who’s in the room. If you have any additional questions, you can always reach out to info contango or feel free to respond right to the email that got you to this room.

I’ll make sure that question gets to the contango team. But thank you so much. Hope everybody has a great afternoon.

Rick Van Nunez, CEO, Contango Ore: Thank you.

Romeo, Moderator/Host: Cheers.

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