Contango Ore Beats Q1 Gold Production Guidance Amid Record Prices
CTGO announced a cash distribution from their toll milling deal with Kinross, posting a 30% beat over guidance on ounces produced last quarter. I sat down with their CEO to discuss this and more.
tl;dr:
In this conversation, CEO Rick Van Nieuwenhuyse of Contango Ore discusses the company's recent news release announcing its US$25 million cash distribution, the source of their +30% beat on ounces-delivered guidance (19,500oz vs. 15-18,000oz), and company debt strategies amidst a turbulent macroeconomic environment. With $80+ million in cash due to them this year at current spot, Contango continues to benefit from record-high gold prices.
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Part 1: The Interview
Time Stamps
00:36: Intro to Contango Ore’s Recent News
03:43: How was tonnage increased so strongly?
06:32: Tonnage Improvements and Operational Efficiency
09:29: Debt Management and Future Projections
12:16: Macro Market Insights and Future Outlook
Part 2: The Companion Article
Contango Ore had a nice little news release last week that was soon overshadowed by the emerging tariff war: Namely that the first toll mill campaign for Manh Choh 2025 through Kinross’ Fort Knox mill is in the books and distributed.
I sat down with CEO Rick Van Nieuwenhuyse again to discuss these numbers, how the production guidance beat came about (30% more tonnes delivered than they guided for), get an update on bridge weight restrictions (spoiler: good news) as well as try to get a sense of CTGO’s plans and strategy in the face of both historically high gold prices and emerging market uncertainty.
And it is certainly hard to ignore the market right now. We’re in dangerous waters, so portfolios and positions naturally get called into question. And all the while, gold, that ancient flight to safety, selling at all-time highs.
Manage your portfolio however you need to get you through this, Contango will be here, producing and selling high-grade gold at $3000+ spot and rapidly removing all debts.
The Highlights:
Total cash distribution of US $24 million. ($9 million from 2024 ore).
19,500oz produced vs. guidance of 15-18,000oz this batch.
Revenue in excess of $80 million expected for 2025 at current prices.
If current prices continue, CTGO may opt to pre-pay and go debt free entirely by EOY.
Bridge issue to be fully resolved. Budget for work has been confirmed.
This interview was short and sweet, so I won’t overweight it with a big article here. 13 minute long interview up top, 350 word written summary down below.
(And forgive the audio quality of the interview - I had Rick on speaker phone speaking through my own mic to record due to internet connectivity issues.)
Thanks for reading. Stay safe out there. And no, I’m not buying the dip (yet). I’ll fire my first bullet at -40% on SPY, if we get there.
-Matthew from JRI
Part 3: The Written Summary
00:36: Intro to Contango Ore’s Recent News
Distribution from their JV with Kinross of US $24M (inc. $9M from 2024)
Grade was slightly lower (6.69g/t), recovery rates slightly higher (93.5%)
Tonnage was significantly higher – 323,000t vs. guided 275,000t.
Ounces delivered of 19,500 exceeds guidance of 15-18,000.
+30% beat
This being done in the wintertime, which just increases potential for adverse weight conditions.
Rick figures they’ve gained back about 5 of the 10 tonnes lost to the bridge weight restrictions imposed last year.
$40m distributions in 2024.
06:32: How was tonnage increased so strongly?
Knocking snow and ice off of the trucks in the wintertime reduced moisture content
better drainage put in place and not having as much moisture in the rock
It being so high-grade (~7gpt) compared to typical Fort Knox ore means if you deliver it they’re going to run it.
09:29: Debt and Financial Strategy
Gold at $2800 produces $80million in distributions for Contango,
first order of business, delivering to the hedge.
Use that cash flow to pay down the debt.
$38m in debt payments this year, $10m remaining by then
If gold stays above $3000, they’d look to get it paid off entirely by EOY.
Update on Weight Restrictions
DOT had its budget approved by federal govt.
Construction/repair planned for this year, likely done in 2026.
So longterm the bridge issue will be fully solved.
12:16: Macro Thoughts
Tariffs have obviously thrown the markets into turmoil
Ultimately will be a positive thing for gold – stability and safety in times of uncertainty
For a company like Contango currently producing, this is a good spot to be.
Contango Recap
Debt free by end of year potentially, paying their hedges.
PEA on Johnson Tract due soon. Next month or so. Expect it to be very robust.
Contango will continue to move forward, but will pace themselves to see what happens in the market.
Wish to be prudent during a tumultuous time.
Second campaign of gold production for the year from Manh Choh coming in May.
