Full Year 2024 Contango Ore Inc Earnings Call

In terms of the mix.

Yeah.

Okay.

Okay.

Five years is probably.

From start to finish if you got your permits within five years.

Youre doing about.

Five times better than the average for for a significant project. So.

By not building a mill in the tailings facility, we avoid a lot of things that have to be permitted.

And obviously when you are not building a mill and a tailings facility you avoid a huge amount of <unk>.

Capital that you have to raise.

A bit of a thumb suck number if we had built mill at macho.

It probably would've been in the $6 $700 billion range.

And my guess would have been obviously it would take a long time to permit.

And during that time.

The beginning of that process, we might have said it would cost 500 million to build so.

And then as the process takes longer.

Cost Mark is and 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.

Macho permitted.

Both state and federal permits within a year and a half or 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 youre a major company, you've got lots of cash flow coming in from multiple other operations.

You can plan that out and.

And sort of the dial that into the overall development plan.

When you're a junior company and Youre looking 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.

Other key assets in the portfolio.

Great No I appreciate the placement loved the one on one last one I think it's useful.

One question from the chat Dave SaaS, because my last mentioned question before I move on.

Can you get disclosed the results from the 2024 mentioned exploration program.

Basically I think we've.

We have the results and there arent any significant results to report so.

And just to review the most of the <unk>.

Program was spent evaluating their relatively large land position.

Constitutes the <unk> lease at least from the <unk>.

And so there was there was not a lot of drilling done.

It was fairly scattered on a number of different.

Early white space Targa.

<unk> targets.

We're actually going to be meeting here with the joint venture here and other things.

Next week actually.

So we will be talking about.

Where to focus this year's exploration effort and we certainly have some ideas on that that will be sharing with.

With Kinloss team.

Thanks.

So I will move on here from Montreal into Johnson, Jack because I know I believe in the relatively near future. We are intending to have a PPA for it so what metrics should investors are you watching for when that drops.

Yes so.

Expect it to where I keep saying, hoping towards the end of the month, Mike Mike tells me I, probably should expand that into April.

Working with our contract are there to get that done it's taken definitely take a little longer than we would've hoped.

But basically it's a pretty typical.

Preliminary economic assessment, but it looks at the project again as a DSO projects. So we're not building a mill and tailings facility and where 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 in the PGA.

But standard metrics.

NPV of the project rate of return.

Again by not building a mill in the tailings facility and you're saving your savings awful lot on on capital cost in and.

The permitting timeline as we've mentioned so.

We think our five year plan that we've outlined previously that we're sticking to.

Still still makes sense installers.

What we want to aim towards.

And.

That means this year isn't as mostly about permitting.

The access road up to the mine site from the coast and permitting of our barge landing site. So those are the activities that we're we'll be focused on this year.

Speaker Change: You just went silent Romeo.

Among mutual Jake that's on me.

Speaker Change: That's helpful.

Speaker Change: Jumping into my last question here, but I was trying to tie to Ripley lip read but that was not really good at it.

Speaker Change: Mumble, even actually liquidating. So they go I do want to ask a question now that we've got many many many months in the rearview after acquiring high growth I'm curious how the team feels in retrospect that transaction and how integrating assets gone generally.

Speaker Change: Enter into contango business, yes, good question.

Speaker Change: Pleased with the transaction and then essentially was a.

Speaker Change: Corporate transaction, but it really was by about buying.

Speaker Change: The Johnson track asset so from a I think from an accounting perspective, that's how Mike Mike is going to treat it but yes.

Speaker Change: In terms of.

Speaker Change: Are we happy with what we bought or do we have buyers remorse futures don't have buyers remorse, we're very happy with.

Speaker Change: With the asset we think it fits our model really well we've developed a really good working relationship with with cooking that regional incorporate incorporated Siri.

Speaker Change: And those are folks that I've known for a long time vision, just having worked up here in Alaska longtime.

Speaker Change: As I mentioned before and I think I've said many times.

Speaker Change: I have looked at the Johnson tracked several times in the past as a potential opportunity and but I just could never imagine.

Speaker Change: The remaining <unk> mill and the tailing facility there but.

Speaker Change: With our DSO model, we get away from all of that.

We're simply it's a run of mine operation.

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.

Speaker Change: Done some additional drilling last year to augment.

Speaker Change: Augment that.

Speaker Change: That particularly in the upper third of the deposit is pretty much that have that drilled out at the drill density. We think is appropriate to develop a mine plan around.

Speaker Change: We have to get in underground to develop the rest of it.

Speaker Change: To a feasibility level at the infill drilling done.

Speaker Change: That mountain that you see in the foreground and the photo on our website.

Speaker Change: It just goes up too steep to be able to drill where we need to be drilling.

Speaker Change: They're so putting the tunnel when is the next logical step.

Speaker Change: And Spanish.

Speaker Change: Spending the time to get the.

Speaker Change: The infill drilling and all the other information that we need to put a proper mine plan together, but.

Speaker Change: The VA will outline that.

Speaker Change: It will start to look at this what the scale of the operation will be I think you'd asked this on the other question.

Speaker Change: What sort of metrics should we be looking for I think.

Speaker Change: Scale of the operation is an underground mine. So it's not an open pit to underground at the sort of selectively mining high grade material underground.

Speaker Change: When you look at the block model that we have on the website.

Speaker Change: You can see a nice high grade zone, there thats 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 thats open at depth because it just hasn't been drilled at depths at all so very exciting to see all that kind of play out.

Speaker Change: As I said this year's activities it will be mostly around.

Speaker Change: Permitting so not a lot of ground disturbance type work going on no drilling were not planning on doing any drilling.

Speaker Change: Or any road construction at this point in time.

Speaker Change: A couple of quick numbers questions you may actually came in a couple of minutes ago.

Speaker Change: Throw it to you for a calculator.

Speaker Change: But one person asked what's the average hedged price per ounce at this time.

Speaker Change: Well the hedge prices all kind of flat its 2025.

Speaker Change: For 25, and 26, we did rollout.

Speaker Change: <unk>.

Speaker Change: 15000 ounces into 2007, and those hedge prices came down a little bit for <unk>.

Speaker Change: Seven two.

Speaker Change: Mid 19.

Speaker Change: Yes, mid nine hundreds and that just has to do with the hedges being underwater, but overall big impact on the hedge book.

Speaker Change: Another numbers question.

Speaker Change: The volumes, we ask based on $3000 an ounce for gold what is management's best estimate for 2025 and 2026 at beta.

Speaker Change: Sorry, I couldn't hear the last part.

Speaker Change: The estimate for 2025 and 26, a beta is what they're looking for this is the EBITDA.

Speaker Change: Well I think youre, so the way I don't have 2006 in detail.

Speaker Change: I have kind of the feasibility but for 25 using I think we originally modeled everything at $2500 gold.

Speaker Change: Which basically had.

Let's say $50 million in distributions from the JV and then you had.

Speaker Change: And your hedge losses, which were kind of took them about half of that and then and then just your overheads and your interest costs. So that would have.

Speaker Change: In that scenario, you would probably make 5 million bucks for the year before principal repayments.

Speaker Change: But you need to kind of a if you are going to assume today's low price end of 2020%.

Speaker Change: Increase.

Speaker Change: Those numbers.

Speaker Change: It should kind of go out prospectively.

Speaker Change: Rick said, how you would look at it yes.

Speaker Change: Yes.

Speaker Change: Obviously as the gold price goes up on the 30% of the ounces that arent hedged.

Speaker Change: For 2025.

Speaker Change: Youre, making that delta.

Speaker Change: <unk>.

Speaker Change: What is it.

Speaker Change: Almost $1000.

Speaker Change: For those for those ounces for 30% of the ounces, that's how I sort of quick math think about it.

Speaker Change: Alright.

Speaker Change: Right.

Speaker Change: If you could please provide an update on any activities related to extending the mine life.

Speaker Change: Yes, so that really speaks to the exploration effort.

Speaker Change: For I would say for the last couple of years.

<unk> has really been kind of looking at the rest of the property. It is a very big property.

Speaker Change: Before to the site is the size of the state of Rhode Island, which is albeit the smallest of United States.

Speaker Change: It's still a big chunk of land and so.

Speaker Change: There's been a lot of stream sediment type work and follow up in identifying.

Speaker Change: Potential drill site.

Speaker Change: <unk> areas around that whole area.

Speaker Change: We like to see more focused exploration around the mine site. So thats, what we will be advocating for.

Speaker Change: When we meet next and I sort of I understand there is an extra being an exploration geologists myself I understand that you've got a big property out there, let's go see what's on it and see if there is any sort of low hanging fruit out there.

Speaker Change: So that has been a good part of the effort for the last couple of years.

Speaker Change: We still think there is some.

Speaker Change: Good targets to drill right in and closer to the mine site. So we'll certainly be advocating for that as I mentioned earlier.

Speaker Change: Now one question that came in and this is Lynn I'll wrap with came in right as the event started mass does anybody out there now how much this company is actually undervalued.

Lynn: I won't ask you that exact question.

Lynn: I will ask what your perspective is generally on that and the kind of market value gap right now and what do you think's going to close that up.

Lynn: I think thats a.

Lynn: CFO question.

I am not touching that one.

Lynn: Yeah.

Lynn: Okay.

Lynn: Yes, no I mean.

Lynn: I think we were definitely.

Lynn: Over oversold, I think shorts with our relatively small equity.

Lynn: Issuance of 12 million shares I think the shorts had a field day frankly.

Lynn: I think as we've seen today.

Lynn: With Mike's brilliant press release on our on our year end results, we're making money.

Lynn: We're not going bankrupt or not.

Lynn: Banks.

We had all sorts of rumors that banks were going to work with us and where we're going to be bankrupt and blah blah Blah I think today's press release shows that that is not the case.

Lynn: There may have been some speculation that one that will need to raise equity and so will short the stock in <unk>.

Lynn: When we raised equity we're not doing that I think thats been.

Lynn: Been pretty clearly broadcast.

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 the.

Lynn: Delivering the hedges and pay the pay the debt down.

Lynn: And we will make a lot of money on this company when the hedges are paid off so.

Lynn: And just to just to speak to it. The reason the hedges are in place is because when we.

Lynn: Our raising money to build this mine the equity markets just werent there we had.

Lynn: We had I don't know what May 18, $1900 gold and.

Lynn: Nobody was interested in investing in the development stage gold junior producer at that time and.

Lynn: I think markets have improved but theres still my sense, there's still a reluctance to.

Lynn: To get down into the the junior stocks still I think theres still a lot of upside potential in the junior stocks.

Lynn: Starting to see the agnico and the new months in the Barrick. So get some respect in terms of the amount of cash flow 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.

Lynn: Paying off the hedges are delivering into the hedges and paying off the debt.

Lynn: That'll be the focus for this year.

Lynn: Awesome.

Lynn: Now some questions just sneak in just as I was saying goodbye, so I wont actually be the last one but they're short somebody asks are there any plans for exploring other assets beyond Johnson track acquired from hydro.

Lynn: Our other so our two core assets being Johnson track and Lucky shots. So no plans to drill a lucky shot right now.

Lynn: Point in time.

We are having a number of strategic discussions.

Lynn: That's something it doesn't cost us a lot of money and we can we think is really kind of the next logical thing to do for both of those projects.

Lynn: Is too.

Lynn: Final home, where we're going to process this material.

Lynn: And so those discussions are taking place in.

Lynn: I kind of lump them into sort of having strategic discussions.

Lynn: On that net debt, we think thats going to result in.

Lynn: Some very positive news once we get something hard and fast put together and of course until we can't until we get through something hard and fast we're going to be under <unk>, and we will be able to say a whole lot about it other than we are.

Lynn: It is a focus for the company for this year for certain.

Speaker Change: 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 is very helpful. Thanks, everybody in the room and are there a lot of you today really appreciate your questions and joining US right before your Purion St. Patrick's day, but now you are free to go please at the buyers have fun.

Lynn: Have a good afternoon.

Thanks.