#USA #Contango ORE #Fairbanks #Peak Gold #Johnson Tract

Contango ORE Reports Significant Operational Income in Q1 2025

Contango ORE, Inc. has recently published its financial results for the first quarter of 2025, highlighting a remarkable income of $19.3 million from its operations. This marks a significant turnaround compared to a loss of $2.9 million for the same period in 2024. The company's net loss for Q1-2025 was recorded at $22.3 million, influenced by a non-cash expense stemming from an unrealized loss of $40.5 million related to derivative contracts.

The quarter demonstrated substantial operational success for Contango as it sold 17,382 ounces of gold, achieving cash costs on a by-product basis at $1,334 per ounce, with all-in sustaining costs (AISC) calculated at $1,374 per ounce, substantially below the year’s target of $1,625. The management has indicated ongoing improvements in both ore transportation and processing workflows at the Fort Knox mine, contributing to the company's positive results. As of March 31, 2025, Contango reported an unrestricted cash position of $35 million, up from $20.1 million at the end of 2024.

Rick Van Nieuwenhuyse, the CEO and President of Contango, emphasized that the first quarter exceeded expectations in terms of gold production from the Manh Choh project, with ongoing deliveries anticipated. Notably, the production included almost 12,000 ounces being delivered toward hedge contracts, which will reduce the overall derivative liability as deliveries progress.

Manh Choh Project Insights

The Manh Choh mining project continues to operate according to plan, with production projections for the year maintaining at around 60,000 ounces of gold. The total life-of-mine (LOM) average production is predicted to be about 58,750 ounces per annum until 2029, with the AISC estimated at $1,400 per ounce. Furthermore, Contango's performance in the Peak Gold Joint Venture maintains its foundational structure, leading to effectively consistent cash flow provisions.

Moreover, the company could share additional profits from the first quarter earnings, including a distribution of $24 million, which reflects the strength of their operational strategies within joint ventures. Following their production campaign, the company anticipates approximately 15,000 ounces in production from the next round.

A significant legal update arrived as well, with the Committee for Safe Communities announcing the dismissal of their lawsuit against Alaska's Department of Transportation regarding haul routes for ore from Manh Choh to Fort Knox. The resolution of this lawsuit should facilitate smoother operational logistics, reinforcing an optimistic outlook for Alaska-based mining initiatives.

Johnson Tract Project Developments

In tandem with developments in Manh Choh, Contango has completed a Technical Report Summary on its Johnson Tract Project. The report reflects potential viability for a seven-year underground mining operation, with robust economic projections including a pre-tax NPV exceeding $400 million at current gold prices. The Initial Assessment revealed enhanced economic potential that warrants continued efforts for permitting underground access and associated infrastructure.

Throughout Q1-2025, the decline in operational losses from previous periods illustrates effective management strategies, encapsulated by net cash generated from operations amounting to $28.6 million. This contrasts sharply with the $4.4 million used in Q1-2024, stemming primarily from strengthened production activity and cash distributions resulting from joint ventures.

In conclusion, as Contango ORE, Inc. transitions into the second quarter of 2025, its impressive first-quarter financial outcomes paint a promising prospect for stakeholders, marked by record operational income and the advancement of both operational projects and legal challenges. Their upcoming conference call is expected to shed further light on these developments, sharing insights with investors and analysts alike.