Earnings call transcript: Contango ORE Q4 2024 sees EPS beat, stock surges

Contango ORE Inc. (CTGO) reported its Q4 2024 earnings with a significant earnings per share (EPS) beat, posting an actual EPS of $1.36 compared to the forecasted $0.08. The company’s revenue came in at $8.5 million, falling short of the expected $12.33 million. The stock surged by 12.63% in the aftermarket, closing at $10.70, extending its impressive one-week return of 18.18% according to InvestingPro data. This rally reflects investor optimism driven by strong EPS performance and strategic operational updates, though the stock remains significantly below its 52-week high of $25.32.

Key Takeaways

• EPS significantly outperformed expectations, with a reported $1.36 versus a forecast of $0.08.
• Revenue fell short of projections, reaching $8.5 million against an expected $12.33 million.
• Stock price increased by 12.63% in aftermarket trading.
• Positive cash flow and debt reduction were highlighted as key financial achievements.
• The company projected to finish 2025 with a reduced debt of approximately $15 million.

Company Performance

Contango ORE demonstrated robust operational performance in 2024, producing more gold than initially planned and generating positive operating cash flow. The company successfully reduced its debt from $60 million at the start of the year to $38 million. Despite facing a total derivative contract loss of $54 million, the company maintained a positive outlook, focusing on increasing gold production and leveraging its unique direct shipping ore (DSO) model. InvestingPro analysis reveals that while the company faces short-term liquidity challenges with a current ratio of 0.47, analysts expect profitability improvements in the coming year.

Financial Highlights

• Revenue: $8.5 million, below the forecast of $12.33 million.
• Earnings per share: $1.36, significantly above the forecast of $0.08.
• Gold production: Nearly 42,000 ounces in 2024, with a projection of 60,000 ounces for 2025.
• Debt reduction: From $60 million to $38 million, with a target of $15 million by the end of 2025.

Earnings vs. Forecast

Contango ORE’s actual EPS of $1.36 was a substantial beat over the forecasted $0.08, marking a surprise percentage of over 1600%. This significant outperformance in EPS, despite the revenue miss, highlights the company’s effective cost management and operational efficiencies.

Market Reaction

Following the earnings announcement, Contango ORE’s stock price surged by 12.63% in aftermarket trading, closing at $10.70. This positive market reaction reflects investor confidence in the company’s strong EPS performance and strategic initiatives, despite the revenue shortfall. The stock’s movement is notable as it approaches its 52-week high of $25.30, indicating renewed investor interest.

Outlook & Guidance

Looking ahead, Contango ORE aims to be debt-free and hedge-free by the end of 2026 or early 2027. The company expects 2025 cash costs to range between $1,200 and $1,600 per ounce and is focused on advancing the Johnson Drax PEA, anticipated in April. Permitting activities for an access road and barge landing site are also underway, supporting future growth prospects. Analyst targets collected by InvestingPro range from $17.30 to $30.00, suggesting significant upside potential. For deeper insights into CTGO’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, along with 7 additional key ProTips for this stock.

Executive Commentary

CEO Rick Van Duenheiser emphasized the company’s financial health, stating, "We’re making money. We’re not going bankrupt." He also highlighted the potential in junior stocks, saying, "We think there’s still a lot of upside potential in the junior stocks." Van Duenheiser noted the strategic benefits of the DSO model, which avoids significant capital expenditures associated with mill and tailings facility construction.

Risks and Challenges

• Derivative losses: The company reported a $54 million loss on derivative contracts, which could impact future financial performance.
• Cash cost pressures: With projected 2025 cash costs between $1,200 and $1,600 per ounce, managing operational expenses remains critical.
• Market valuation concerns: Despite operational successes, Contango ORE’s valuation remains a topic of discussion among analysts.

Q&A

During the earnings call, analysts inquired about the rationale for debt payment deferral and the company’s exploration plans for the Manchow and Johnson Drax projects. Executives addressed concerns over market valuation and reaffirmed their strategic focus on reducing debt and enhancing production capabilities.

Full transcript - Contango ORE Inc (CTGO) Q4 2024:

Romeo, Moderator/Host: Today, I saw some early rising Australians on the list, so thank you very much for joining us. Appreciate particularly everybody joining us on St. Patrick’s Day for a corporate update and Q and A session from Tango Ur related to this morning’s press release regarding 2024 earnings. I’m joined today by the company’s President and CEO, Rick Van Duenheiser and CFO, Myklar Kajalman. Thank you for joining me.

Rick Van Duenheiser, President and CEO, Contango: Good to see you again, Romeo.

Romeo, Moderator/Host: Awesome. So here’s how today’s going to work for the folks in the room. I’m first going to throw it to Rick for just a quick rundown of today’s news, and then I’ve got some questions I’ll be posing to both speakers. After that though, we are eager to take questions from the audience. This is an interactive event.

Please use that chat button on the bottom right of your screen. If whatever reason we don’t get to your question today, COVID has been covered in a previous event, etcetera, all good. I’m going to send that chat transcript to the Contango team and they’ll get back to you as soon as possible. Last piece of housekeeping, today’s event is also being recorded and will be available probably late this afternoon on both6.com and also our YouTube channel. That’s enough out of me.

I’m going to throw it to Rick to get to the protein of today’s events.

Rick Van Duenheiser, President and CEO, Contango: Thanks, Romeo, and thanks everybody for joining us on St. Patrick’s Day. We put out our annual one year news release on our activities for the year for 2024. It’s been a was a good year, I think, where we produced more gold than we had planned originally. And and our cash costs came in just a little, just a slight bit over our guidance of $1,200 an ounce.

And so I think overall it’s been, 2024 was a good year for production, getting Manchow up and running. We started production in July, produced just a little shy of 42,000 ounces. And as I said, that good cash cost. So for an annual report, I think it’s been a good year for us. And we are off and running for 2025.

We can certainly talk more about that, but we’re in the middle of our actually probably about two thirds of the way through the first batch of gold pour for 2025 and have three more planned for the year with a total projected gold production of about 60,000 ounces. So I’ll that’s a quick introduction. Today’s release on our year end results are mostly for Mike to take credit for. So I’m sure there’ll be lots of questions for Mike on that. And so Romeo, we’ll just open it up for the Q and A.

Awesome. Sounds great. So like

Romeo, Moderator/Host: I said, I got a couple of questions to run through first. I did want to ask a question. What were the factors you reckon that led Poncho to exceed that production guidance by over 25% in 2024? Just how did that come to be is really my question.

Rick Van Duenheiser, President and CEO, Contango: Yes. So I’ll start and maybe ask Mike to join in from his perspective. But basically, we’ve been transporting ore from the mine site since November of twenty twenty three. So we had a 2024 had a whole year of transporting ore. And of course, we started mining in July of twenty twenty three, so mining and stockpiling ore at the Manchos site.

So being a direct shipping ore model, it’s not your typical mine and mill startup as you typically see in a mining, milling operation. So we started mining, we started stockpiling ore at Manchaux. And then in November, we started hauling the ore to the mill site at Fort Knox. Now we didn’t start with all 60 trucks we had to build up for that. So if there was a ramp up period, that was kind of the ramp up period.

Bottom line, there was more ore delivered to the stockpile at Fort Knox than anticipated by the feasibility study. And when there’s higher grade ore on the stockpile at Fort Knox, they’re pretty much always going to run it through the mill because you’re running seven or eight gram material versus 0.6 or 0.5 gram material, so from Fort Knox. So obviously, you always run better grade when you have it available and that’s what we did. So we ended up producing about 10,000 ounces more than sort of the middle of our plant. We had always guided 30,000 to 35,000 ounces and we produced, like I said, just shy of, was it 41,300, I think it was?

Yes, it was a total. And we still had some gold that we sold, ended up from the 2024 batch processing, the final processing in November that we actually sold in ’twenty five. So, but just kind of sticking to the basic numbers. And maybe, Mike, you want to go through the official numbers?

Mike Kajalman, CFO, Contango: Yes. The only thing I’d add to that is originally the feasibility study had five batches or five campaigns in 2025 starting in January and ending in December. They pulled kind of half of the batch in 2024. It’s kind of pulled from 2025. And then they’ve realigned the campaigns to kind of be the middle month of each quarter for 2025.

So that was part of the reason there was extra production in 2024.

Romeo, Moderator/Host: Great. I appreciate that extra context. It’s helpful. One thing I’ve got for you, Mike. With positive operating cash flow in ’twenty four, what is the cash flow projection for 2025, but then also beyond that?

Mike Kajalman, CFO, Contango: Yes. The yes, there’s positive cash flow from operations for 2024. And then when you drop below that line, all the excess cash is effectively going towards paying down debt and delivering to the hedges. So for ’twenty five and ’twenty six, it’s mostly planned that all the free cash flow that comes out of operations is basically paying down the debt and then delivering the hedges so that ultimately we can hopefully be our goal is to be debt free and hedge free by the end of ’twenty six. But with the restructure, we have the ability now to push those into the first half of twenty twenty seven.

Romeo, Moderator/Host: Great. I got a number of questions that came in over email. So Mike, if you don’t mind, I’ll just kind of rapid fire shoot them at you. First one that came through is, is the hedge coming off once you pay off your debt?

Mike Kajalman, CFO, Contango: Yes. The hedge delivery schedule, it kind of mirrors the principal repayment schedule. So both of those mature as of the restructure, both those mature in June 2027. But from a principal perspective, the bulk of that is being paid down this year. So we should finish the year around $15,000,000 left on the principal repayments that would get paid out into 2027 after that.

And then hedge deliveries, we plan to kind of cut in half by the end of this year. So there’s 86,000 ounces of hedge gold remaining as of the end of twenty twenty four. We expect to finish the year around 43,000 ounces of hedges remaining. And then those are paid down again in ’twenty six and into early ’twenty seven.

Romeo, Moderator/Host: Great. Somebody also asked, if you could just and I know, I think this was covered in PRs, but it’s always good to reiterate. Can you just say how much Contango had in debt at the start of ’twenty four and how much it finished with and how much you project to come off this year?

Mike Kajalman, CFO, Contango: Yes. Okay. So thinking back, we started 2024 with or in July of twenty twenty four, we had $60,000,000 of debt. We paid down just under $8,000,000 in 2024, so bringing the debt balance to $52,000,000 We since made just under $14,000,000 principal repayment in January. So the debt is down at roughly $38,000,000 as of today.

And we expect to finish the year at about $15,000,000 of debt remaining. And then the hedge deliveries, we started with 124,000 ounces of gold hedges, and we finished the year at 86,000 ounces of hedges remaining. So we delivered about just under 38,000 ounces towards the hedges on effectively 42,000 ounces of gold production. So we were aggressive in delivering into that.

Romeo, Moderator/Host: Great. And it’s on the PR is an interesting way to think about it, but I’d love if we could just reiterate it here is, what percentage of the mine life is unhedged overall?

Mike Kajalman, CFO, Contango: Yes. So originally, the way we looked at it when the debt was restructured, it was always supposed to kind of be about 65% hedged during the term of the loan. But for the life of mine, it was supposed to be about 40%. How we look at it and where we’re at today because of what we delivered and the extended mine life or extended ore hull plan, we are roughly 35% hedged, 65% unhedged for the life of mine. And as I said, we’re going to deliver into those hedges mostly between now and the end of twenty twenty six.

And then after that, it’s we’re totally unhedged and no debt.

Romeo, Moderator/Host: Great.

Rick Van Duenheiser, President and CEO, Contango: I’ll just throw in that ’twenty seven, ’twenty eight are big banner years. Not only are we unhedged, but you’re the line’s way through the mining phase of the project. And so you’ve mined a lot and you have a big stockpile sitting at Mon Chaux. And so it’s really about the ore haul plant then. So relatively, you’re not paying for a lot of mining that’s going on.

Your RRL and sustaining costs are going to be very low. I think they’ll be in the $1,000 to $1,100 range at that time.

Romeo, Moderator/Host: I’m going to jump a couple of questions in the chat just because they’re right on topic. So I’m just going to loop them in. Tate from The Maxim Group asks if you continue to expect the $20.25 ASIC of $16.25 per ounce?

Rick Van Duenheiser, President and CEO, Contango: Yes. We have no information

Mike Kajalman, CFO, Contango: to change that. I think what you’re going to see is we’re going to finish this campaign in Q1. We should have all the costs for that campaign in Q1. So when we put out those results in mid May, you should get a good indication of what our cost will be. And it’ll be somewhere hopefully between $1,200 and $1,600 on the cash cost for ASIC.

We kind of use the term ASIC is what came out of the feasibility study, but cash cost is how we report it in our financials. But our cash costs are pretty much fully baked costs. And there’s really there’s not really many other costs that would we’d add to it for ASIC. So we finished the year at $12.00 9 for cash costs and effectively ASIC for 2024. And like I said, ’25 should be somewhere between that and the 1,600 we guided

Romeo, Moderator/Host: on. Great. He also asked what was the realized loss on derivative contracts in 2024 of $19,900,000

Mike Kajalman, CFO, Contango: 20 20 4, so we had a $20,000,000 loss on the realized on the hedges. And so that’s really what happens when you deliver into a hedge that becomes a realized loss. Otherwise, we have there’s a component that’s kind of your mark to market or your fair value you do at the end of each period. So that total was $35,000,000 at the end of twenty twenty four. So that combined is $50,000,000 50 4 million

Romeo, Moderator/Host: dollars Right. That makes sense. If you got any follow-up questions, let me know in the chat. I’m happy to shoot them in. A couple I got, what is the current timeline?

I think I’ve been over this, but I just want to reiterate if possible, timeline for eliminating the remaining credit facility balance?

Mike Kajalman, CFO, Contango: Credit facility balance, yes. So it’s currently scheduled to be paid down to $15,000,000 by the end of this year, and then the remaining $15,000,000 gets paid out between 2026 and mid-twenty twenty seven.

Romeo, Moderator/Host: Great. I’m just curious what you’re thinking, what drove the decision to defer that $10,600,000 in debt payments forward into 2027?

Mike Kajalman, CFO, Contango: Well, it all kind of started I’ll start this. I guess, Rick, you can chime in if you want. But it all started with the bridge wave restrictions and how much we expected to produce in 2025 when we got the revised mine plan from Kinross. And so when we looked at that and looked at the delivery schedule and the hedges and the principal repayments and just what we could see in the feasibility study for 2026 for the scheduling, it just it became apparent that we wanted to realign the repayments and the delivery schedule hedges to better match the I guess, the extended overhaul mine plan. So it was just pushing out a little bit.

It actually wasn’t very significant in what we had to push out, but it took time and effort to get there. And doing two sets of lenders takes a little bit more time. But at the end of the day, we I think we’re in a better position to match to better match the new schedule.

Romeo, Moderator/Host: Great. I appreciate that. Yes.

Rick Van Duenheiser, President and CEO, Contango: I don’t really have anything to add to that. Just the mine plan, everything has been compared to the feasibility study, which is somewhat typical. And again, this is not your normal mine startup where you’re mining and putting ore through a mill right away. This is the transportation plan. We basically were in operation mining and stockpiling for a whole year before we actually started milling.

So you’re basically your guidance is as per the feasibility study until you get up and running. And now we’ve learned a bunch of things after well over a year of hauling ore and stockpiling and all those operating issues that come up, you bake into your new plan going forward. So, that’s effectively what happened with the updated mine plan.

Romeo, Moderator/Host: Great. While we’re on that actually, I just sort of banked shut to that last comment. I’d love if you could do just a quick one on one lesson for folks in the room of what the economic advantages are to direct shipping ore versus the more classic mill setup?

Rick Van Duenheiser, President and CEO, Contango: Yes. I mean, smaller environmental footprint is sort of the standout. And what that means is you’re not building a mill in a tailings facility, which you start from in order to build one, you have to permit one. And as we all know, in The United States and in Canada, I think both jurisdictions, that’s a big long process and can be extremely long process. Five years is probably, if you from start to finish, if you got your permits within five years, you’re doing about five times better than the average for a significant project.

So by not building a mill and a tailings facility, we avoid a lot of things that have to be permitted. And obviously, when you’re not building a mill in a tailings facility, you avoid a huge amount of capital that you have to raise. A bit of a thumbs up number, if we had built a mill at Moncho, it probably would have been in the $600,000,000 7 hundred million dollars range. And my guess would have been, obviously, it would take a long time to permit. And during that time, in the beginning of that process, we might have said it would cost $500,000,000 to build.

So and then as the process takes longer, it obviously costs more because we know that there is inflation just normally and we’ve certainly seen excess higher levels of inflation in the last five years. So those are the big things that say, the permitting, you take a lot of permitting risk off the table and shorten the timeline. We got Montcho permitted both state and federal permits within a year and a half of starting the process. So that’s somewhat unheard of in our business. So that’s one of the reasons we really like this model, especially for a junior company.

If you’re a major company, you’ve got lots of cash flow coming in from multiple other operations. You can plan that out and sort of dial that into the overall development plan. But when you’re a junior company and you’re looking for capital, minimizing the amount of capital, minimizing that time lag between getting your permits and being able to construct, that’s a big deal. So we like the model. We think it applies very well to the other assets or other key assets in the portfolio.

Romeo, Moderator/Host: Great. No, appreciate it. I love the one on one lesson. I think it’s useful. One question from the chat, Dave F.

Asks, this is my probably last night show question before I move on. Can you yet disclose the results from the 2024 Mencho Exploration Program?

Rick Van Duenheiser, President and CEO, Contango: Basically, I think we have the results and there aren’t any significant results to report. So, and just to review, most of the program was spent evaluating the relatively large land position that constitutes the Tetland lease, lease from the Tetland tribe. And so there was not a lot of drilling done and it was fairly scattered on a number of different fairly widespread targets. We’re actually going to be meeting here with the joint venture here another, I think it’s next week actually. And so we’ll be talking about where to focus this year’s exploration effort and we certainly have some ideas on that that we’ll be sharing with Kinloss team.

Romeo, Moderator/Host: Great. So I will move on here from Moncho into Johnson Drax. I know I believe in the relatively near future, we are intending to have a PEA for it. So what metrics should investors be watching for when that PEA drops?

Rick Van Duenheiser, President and CEO, Contango: Yes. So expect it to work I keep saying hoping towards the end of the month. Mike tells me I probably should expand that into April. We’re working with our expand that into April. We’re working with our contractor there to get that done.

It’s taken, definitely take a little longer than we would have hoped. But basically, it’s a pretty typical preliminary economic assessment, but it looks at the project again as a DSO project. So we’re not building a mill and tailings facility and we’ve identified a couple of different options as to where to send this material that we think are realistic that will be covered in the PEA. But standard metrics, NPV of the project, rate of return, again, by not building a mill in the tailings facility, you’re saving yourself a lot on capital cost and the permitting timeline, as we’ve mentioned. So, we think our five year plan that we’ve outlined previously and that we’re sticking to still makes sense and still is what we want to aim towards.

And what that means this year is mostly about permitting the access road up to the mine site from the coast and permitting a barge landing site. So those are the activities that we’ll be focused on this year. You just went silent, Romeo.

Romeo, Moderator/Host: I’m on mute. What a jerk. That’s all me. My fault, fellas. Jumping into my last question here before

Mike Kajalman, CFO, Contango: I was

Rick Van Duenheiser, President and CEO, Contango: trying to try to lip read, but I was not really good at it.

Romeo, Moderator/Host: Yes. I mumble even actually when lip reading, so there you go. I do want to ask you a question. Now that we’ve got many, many months in the rearview after acquiring High Gold, curious how the team feels in retrospect about the transaction and how integrating assets gone generally into Contango’s business?

Rick Van Duenheiser, President and CEO, Contango: Yes, good question. We’re really pleased with the transaction. And then essentially it was a corporate transaction, but it really was about buying the Johnson track assets. So from a I think from an accounting perspective, that’s how Mike is going to treat it. But in terms of are we happy with what we bought or do we have buyer’s remorse?

We sure don’t have buyer’s remorse. We’re very happy with the asset. We think it fits our model really well. We’ve developed a really good working relationship with Cooking at Regional Incorporated, Siri. And those are folks that I’ve known for a long time just having worked up here and lasted a long time.

As I mentioned before and I think I’ve said many times, I have looked at Johnson Track several times in the past as a potential opportunity. And but I just could never imagine permitting a mill in a tailing facility there. But with our DSO model, we get away from all of that. We’re simply it’s a run of mine operation. We get underground.

We develop a good mine plan. Very excited about what we see from the resource modeling work that we’ve done, and we’ve done some additional drilling last year to augment that particularly in the upper third of the deposit. We’ve pretty much that had that drilled out at the drill density we think is appropriate to develop a mine plan around. We have to get in underground to develop the rest of it to a feasibility level, get the infill drilling done. That mountain that you see in the foreground in the photo on our website, it just goes up too steep to be able to drill where we need to be drilling up there.

So putting the tunnel in is the next logical step and spending the time to get the infill drilling and all the other information that we need to put a proper mine plan together. But the PA will outline that, and I think it’ll start to look at this, what the scale of the operation will be. I think you’d asked us on the other question, what sort of metrics should we be looking for? I think the scale of the operation is an underground mine, so it’s not an open pit, it’s underground, it should be sort of selectively mining high grade material underground. When you look at the block model that we have on the website, you can see a nice high grade zone there that’s going to be right in the middle of where the tunnel goes in.

So it’s just a perfect spot to start mining this thing and obviously that’s open at depth because it just hasn’t been drilled at depth at all. So very exciting to see all that kind of play out. And as I said, this year’s activities will be mostly around permitting. So not a lot of ground disturbance type work going on, no drilling, not planning on doing any drilling or any road construction at this point

Romeo, Moderator/Host: in time. Great. A couple of quick numbers questions here, Mike, that came in a couple of minutes ago. So I’m going to throw it to you for a calculator. But one person asked, what’s the average hedged price per ounce at this time?

Mike Kajalman, CFO, Contango: Well, the hedge price is all kind of flat. It’s $20.25 for ’twenty five and ’twenty six. We did roll out about 15,000 ounces into ’twenty seven, and those hedge prices came down a little bit for ’twenty seven to mid-1900s or yes, mid-1900s. And that just has to do with the hedges being underwater. But overall, it’s not a big impact on the hedge book.

Another

Romeo, Moderator/Host: numbers question, Bevons, we asked, based on $3,000 an ounce for gold, what is management’s best estimate for 2025 and 2026 EBITDA?

Mike Kajalman, CFO, Contango: Sorry, I couldn’t hear the last part.

Romeo, Moderator/Host: Best estimate for 2025 and 2026 EBITDA is what they’re looking for.

Mike Kajalman, CFO, Contango: So the EBITDA. Well, I think you’re so the way I don’t have 26 in detail. We just have kind of the feasibility. But for twenty five, million dollars using I think we originally modeled everything at $2,500 gold, which basically had, let’s say, dollars 50,000,000 in distributions from the JV. And then you had your hedge losses, which were kind of took up about half of that, and then just your overheads and your interest costs.

So that would have in that scenario, you would probably make $5,000,000 for the year before principal repayments. But you need to kind of if you’re going to assume today’s gold price, add a 20% increase to those numbers and it should kind of go up respectively. Rick, is that how you would look at it?

Rick Van Duenheiser, President and CEO, Contango: Yes. I mean, obviously, as gold price goes up on the 30% of the ounces that aren’t hedged for 2025, you’re making that delta of, what is it, almost $1,000 for those ounces, for 30% of the ounces. That’s how I sort of quick math think about it.

Romeo, Moderator/Host: Okay. Somebody right in the end asked if you could please provide an update on any activities related to extending the Muncheau Mine life.

Rick Van Duenheiser, President and CEO, Contango: Yes. So that really speaks to the exploration effort. And for I’d say for the last couple of years, Kinross has really been kind of looking at the rest of the property. It is a very big property. I compared it before to the size it’s the size of the state of Rhode Island, which is, albeit, the smallest United States.

It’s still a big chunk of land. And so there’s been a lot of stream sentiment type work and follow-up and identifying potential drill site drill areas around that whole area. We like to see more focused exploration around the mine site, so that’s what we’ll be advocating for when we meet next. And I sort of I understand as an expert being an exploration geologist myself, I understand that you’ve got a big property out there. Well, let’s go see what’s on it and see if there’s any sort of low hanging fruit.

So that has been a good part of the effort for the last couple of years. We still think there’s some good targets to drill right in and closer to the mine site. So we’ll certainly be advocating for that as I mentioned earlier. Great.

Romeo, Moderator/Host: Now one question that came in, this is the one I’ll wrap with, came in right as the event started and asked, does anybody out there know how much this company is actually undervalued? So I won’t ask you that exact question, but I will ask what your perspective is generally on the kind of market value gap that’s on right now and when do you think is going to close that up?

Rick Van Duenheiser, President and CEO, Contango: I think that’s a CFO question.

Mike Kajalman, CFO, Contango: No, absolutely not. I’m not touching that one. Thanks for the CEO.

Rick Van Duenheiser, President and CEO, Contango: Yes. No, I mean, I think we were definitely oversold. I think the shorts with our relatively small equity issuance of 12,000,000 shares, I think the shorts had a field day, frankly. I think as we’ve seen today with Mike’s brilliant press release on our year end results, we’re making money. We’re not going bankrupt.

We’re not the banks we heard all sorts of rumors that the banks weren’t going to work with us and we were going to be bankrupted and blah, blah, blah. I think today’s press release shows that that is indeed not the case. There may have been some speculation that we’ll need to raise equity and so we’ll short the stock and we’ll buy it when we raise equity. We’re not doing that. I think that’s been pretty clearly broadcast.

So if we have to hunker down for a year and not drill at Lucky Shot, that’s what we’re going to do. We’re going to deliver into the hedges and pay the debt down and we’ll make a lot of money in this company when the hedges are paid off. So, and just to speak to it, the reason the hedges are in place is because when we were raising money to build this mine, the equity markets just weren’t there. We had, I don’t know what, $1,800, 19 hundred dollars gold and nobody was interested in investing in a development stage gold junior producer at that time. And I think markets have improved, but there’s still in my sense, there’s still a reluctance to get down into the junior stocks still.

I think there’s still a lot of upside potential in the junior stocks. Starting to see the Agnicos and the Newmonts and the Barrick’s all get some respect in terms of the amount of cash flow they’re generating from their gold operations. I don’t think the junior stocks have seen that yet, and I think we’re certainly a stock that can that will perform well as the gold price continues to increase. And like I said, we’re making good money. We’re paying off the hedges or delivering in the hedges and paying off the debt, and that will be the focus for this year.

Romeo, Moderator/Host: Awesome. Now some questions that sneak in just as I was saying goodbye. So that won’t actually be the last one, but they are short. Somebody asked, are there any plans for exploring other assets beyond Johnson Trac acquired from High Gold?

Rick Van Duenheiser, President and CEO, Contango: Our other so there’s our two core assets being Johnson Track and Lucky Shot. So no plans to drill Lucky Shot right now at this point in time. We are having a number of strategic discussions. That’s something that doesn’t cost us a lot of money and we can we think it’s really kind of the next logical thing to do for both of those projects is to find a home to where we’re going to process this material. And so those discussions are taking place and I kind of lumped them into sort of having strategic discussions on that.

We think that’s going to result in some very positive news once we get something hard and fast put together. And of course, until we can’t until we get to something hard and fast, we’re going to be under CA and won’t be able to say a whole lot about it other than we’re it’s a focus for the company for this year for certain.

Romeo, Moderator/Host: Okay, makes sense. And I think that actually also tackles the last question. So there you go. Mike, Rick, thank you so much. I think this was very helpful.

Thanks, everybody in the room. I know there were a lot of you today. Really appreciate your questions and joining us right before your beer on St. Patrick’s Day, but now you are free to go. Please hit the bars.

Have fun. Everybody, have a great afternoon. Cheers.

Rick Van Duenheiser, President and CEO, Contango: Cheers. Thanks.

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