Contango ORE, Inc. Modifies Credit Terms and Kicks Off Gold Campaign
In a significant move for the company, Contango ORE, Inc. (NYSE American: CTGO) has announced an amendment to its credit facility, which now defers principal repayments and adjustments regarding its gold hedging strategy. The new repayment schedule involves deferring $10.6 million in principal payments and the delivery of 15,000 hedged gold ounces to the first half of 2027. Additionally, the maturity date for the credit facility has been extended from December 31, 2026, to June 30, 2027. This adjustment does not alter the interest rate or other critical terms of the credit facility.
The company expects that this revised schedule will enable it to maintain exposure to fluctuating spot gold prices for around 30% of its net production in 2025 and 2026. For 2027, this figure will increase to 80%, reaching 100% in subsequent years. Based on a predicted Life-of-Mine (LOM) plan and a $2,500 spot gold price, Contango estimates that its share of cash flows from the Peak Gold Joint Venture (PGJV) could reach approximately $80 million in 2027 and $70 million by 2028, considering the anticipated delivery of the 15,000 hedged ounces.
In conjunction with this financial restructuring, Contango is excited to report that the PGJV commenced its first gold production campaign on February 7, 2025. The company estimates its share from this campaign to yield between 15,000 and 18,000 ounces of gold as ore continues to be transported to the Fort Knox processing facility.
Rick Van Nieuwenhuyse, President and CEO of Contango, expressed satisfaction regarding the facility extension, emphasizing how it aligns with the prolonged ore haul plan set to continue until 2029. This newly approved repayment schedule offers Contango the necessary flexibility to continue servicing its debts while stabilizing its positions in the market, which is crucial as gold prices elevate.
As prices hover around $2,900 per ounce, the company believes it stands to gain more substantial free cash flows than originally anticipated. Moreover, the PGJV, operated by KG Mining Alaska, Inc. (a subsidiary of Kinross Gold), is actively pursuing initiatives aimed at operational cost reduction and performance improvement, including reducing moisture content in ore and managing natural buildup that affects transport processes.
In addition to these developments, Mr. Van Nieuwenhuyse indicated progress on the preliminary economic assessment (PEA) for the Johnson Tract project, which is expected to conclude and be available by March 2025. This PEA comes at a crucial time as the market is showing renewed interest and opportunities in gold exploration driven by consistent price surges.
Contango ORE, Inc. remains focused on its objectives in Alaska’s mineral exploration and is optimistic about its future cash flows stemming from its operations and partnerships in the Peak Gold Joint Venture. Further updates will be provided as the company continues to monitor gold prices and refine its strategies to maximize profitability. A live interview to discuss these updates is scheduled for February 18, 2025, at 1 PM EST, where executives will elaborate on the company's current and future initiatives.
For more information on Contango and its ongoing projects, interested parties can visit their website at www.contangoore.com.
The company expects that this revised schedule will enable it to maintain exposure to fluctuating spot gold prices for around 30% of its net production in 2025 and 2026. For 2027, this figure will increase to 80%, reaching 100% in subsequent years. Based on a predicted Life-of-Mine (LOM) plan and a $2,500 spot gold price, Contango estimates that its share of cash flows from the Peak Gold Joint Venture (PGJV) could reach approximately $80 million in 2027 and $70 million by 2028, considering the anticipated delivery of the 15,000 hedged ounces.
In conjunction with this financial restructuring, Contango is excited to report that the PGJV commenced its first gold production campaign on February 7, 2025. The company estimates its share from this campaign to yield between 15,000 and 18,000 ounces of gold as ore continues to be transported to the Fort Knox processing facility.
Rick Van Nieuwenhuyse, President and CEO of Contango, expressed satisfaction regarding the facility extension, emphasizing how it aligns with the prolonged ore haul plan set to continue until 2029. This newly approved repayment schedule offers Contango the necessary flexibility to continue servicing its debts while stabilizing its positions in the market, which is crucial as gold prices elevate.
As prices hover around $2,900 per ounce, the company believes it stands to gain more substantial free cash flows than originally anticipated. Moreover, the PGJV, operated by KG Mining Alaska, Inc. (a subsidiary of Kinross Gold), is actively pursuing initiatives aimed at operational cost reduction and performance improvement, including reducing moisture content in ore and managing natural buildup that affects transport processes.
In addition to these developments, Mr. Van Nieuwenhuyse indicated progress on the preliminary economic assessment (PEA) for the Johnson Tract project, which is expected to conclude and be available by March 2025. This PEA comes at a crucial time as the market is showing renewed interest and opportunities in gold exploration driven by consistent price surges.
Contango ORE, Inc. remains focused on its objectives in Alaska’s mineral exploration and is optimistic about its future cash flows stemming from its operations and partnerships in the Peak Gold Joint Venture. Further updates will be provided as the company continues to monitor gold prices and refine its strategies to maximize profitability. A live interview to discuss these updates is scheduled for February 18, 2025, at 1 PM EST, where executives will elaborate on the company's current and future initiatives.
For more information on Contango and its ongoing projects, interested parties can visit their website at www.contangoore.com.
Topics Financial Services & Investing）
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