Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
0:38 summit is being recorded and will be available to watch afterwards on 6.com. So without further ado, Rick, I'll hand it over to you to kick things off. Perfect, Kyle. Thanks very much and welcome everybody. Thanks for joining us today for an update on Contango. Lots going on so we're going to get right into it here. Of course I'll be making some forward-looking statements So just keep those in mind as we go through the presentation. This is really just an update. There is a lot going on. So I'm gonna go through a series of slides starting with our corporate overview and just update you on our share count. We have 7.6 million shares outstanding now, 8 million fully diluted when you include options and warrants. We had a pretty exercise of number of the warrants. So it's changed our share structure just slightly.
1:30 We still have the convert out, which is convertible at $30 and 50 cents. And we have about $9.5 million of cash in the bank as of May. We are spending money. So we're moving through things as we continue to advance our Moncho project, especially. So I'll update you on Muncho. I'm happy to say we are now under full construction with the receipt of the permit. This of course is our joint venture partnership with Kinross on land owned by the Tetlin tribe where we're developing the Moncho project over in the eastern part of Alaska there. I'll give you an update on Lucky Shot as well. And of course, I'll just mention early stage exploration projects at Shamrock, Eagle Hona and Triple Z, but we won't be able to provide any further details on those with just limited time here.
2:23 So Moncho, we now have reserves. We have probable reserves, about 1 million ounces. That grade is 8 grams per ton. This is now based on our SK 1300 feasibility technical report, which is referenced in the blue highlight there at the bottom of the image. Of course, Manchow located on private lands, close to infrastructure, close to road infrastructure at least. And then the business partnership with Crenross allows us to use the Fort Knox milling facilities, which of course has lowered our capital costs to construct the project, lowered our environmental footprint by every metric you can think of. And all of that of course has lowered our execution risk, which I think is demonstrated by the fact that we continue to just make great advances here on the project.
3:18 I've been showing this slide for well over a year now, plan to show in a great mining location on top of a hill. I'm gonna replace it now with this slide, which shows the near completion of the road. There's more work to do on the road, but it's basically usable now, especially for getting our big mining equipment up to site. That started over the weekend actually, Now that we have received all of the operating permits, which is included as the mine site operating plan, which is approved by DNR and DEC here in Alaska. So mine site construction is now underway officially. We approved a $33.6 million budget for the first half of 2023, which we're just wrapping up and that allowed us to complete the road construction that you see in the image here all winter long, which has kept us ahead of schedule and on budget.
4:19 We will be approving the second half budget here coming up. And the bulk of that budget is mine site construction and actual mining and pre-stripping and things like that. So this project is solidly moving forward on schedule and on budget. Actually, I should say ahead of schedule. I showed this slide previously, it's the winter road construction that's gone on. And now of course, it's a rapidly approaching summer up here in Alaska. You can see some of the more recent pictures just from within about a week or so ago. And what I really wanna point out in this slide is a big milestone is this road here is a 6% road coming up the side of the hill and joins the old mine access or the drill access road that was pretty much just went kind of straight up the ridge and was obviously too steep in places for the haul trucks, the ore haul trucks to maneuver. So that's why we put this 6% grade in. And you can see now that that road construction is just nearing completion because obviously when you're up on top of the ridge here, the rest of the road construction to the mine site area, which is right in here, is pretty straightforward and pretty simple. So really pleased with the advance of the construction.
5:43 I've been talking about our mine site and we were waiting for the approval of the mine operating permit. Well, we now have that. So mine site construction is now underway. A simple mine site, 2 open pits, the main pit and the North Muncho pit, waste facilities deposited around the deposit, around the middle deposit. And then our potential asset generating waste rock stockpile which will be backfilled into the main Manchot pit at the end of the mine line. Again, just nice, solid advances on advancing the project up at site. I'll be actually heading out there a week after next, So I'm anxious to get up and see for myself the advances taking place on the ground.
6:38 Keywood, of course, is our mining contractor. They're one of the biggest and best in the world. So they now have mobilized or mobilizing equipment up to site, excavators, haul trucks, graders, et cetera. So that's, that work is well underway. And of course, as we mentioned before, Black Gold Transport, a local Alaska contractor was engaged to do the ore haul contract between Moncho and the Fort Knox mill. We should have some pictures of the truck and trailer assemblages here soon. They have started to arrive here in Alaska in the last week or last couple of weeks. So looking forward to seeing those in action as well.
7:25 Update on our feasibility study. This is now an official SK 1300 report. We announced that late last week. Not really a huge amount of changes from the Kinross Feasibility Study that was done in July of last year, just really updates incorporating what we've learned and what we've spent to date. So initial capital costs, and you can see, sorry, the annual production of the mine is 225,000 ounces. Our share of total ounces is 300. And on an annual basis, we'll be receiving about 67,500 on average. 8g average grade. Initial capital, 189M, which included a 14M contingency. Our share of that was 56.8.
8:16 And Now we're transitioning to a mining operation. We're starting to capitalise strip waste material. That was $26M of capitalised waste. Our share of that was 7.8. So if you add the 56.8 and the 7.8, you get 64.6. And so that is our official initial capital to get to commercial production underway. The other update number is our all in sustaining costs came in at 1116, 1116. We have been guiding to 1100, so we're a little higher than that. I think in today's world of inflation, I think we've done pretty well here, both constraining capital
9:07 and keep operating costs under control. That is assuming $80 barrel oil price. So of course, we've announced earlier in the month, the credit facility with ING was finalized. So that brings a potential $70 million to spend on the project going forward. Also pleased to announce that we've budgeted $3 million for continued exploration. It'll focus in 2 areas right around the chief Danny area, which of course is right around the deposits, lots of anomalous ground to continue to drill there and define additional reserves for resources and hopefully reserves for the operation going forward. And of course we have the huge land package where we'll continue to advance projects, anomalous areas that were identified through last year's regional exploration program on the huge land area. It's between the lease and the state mining claims, it's about 688,000 acres in the heart of the Tintina Gold Belt. So lots of anomalous prospects to follow up on and along with the drilling that'll take place right around the Chief Dan area. That'll be this year's planned exploration efforts that we'll look forward to updating you on as we
10:39 get more information later in the year. So this slide I've been showing you for a while. I've moved the star a little bit forward there to reflect the fact that we now have the mine operating permit, which was approved earlier in May. And so we keep moving that star towards that long-term goal of production at site there. So I think we're on track to achieve that in 2024. So we'll look forward to keeping you updated there. Of course, while Kinross continues to be the operator and advance the project at Moncho. We'll focus our exploration efforts on Lucky Shot.
11:24 I just point out our 100% own ZZZ, Eagle Hona and Shamrock properties. We will continue to advance those, they're early stage, but we think they're very perspective. And of course they're right next to the road system as well. So focusing in on Lucky Shot, last year we completed an underground development program and some exploration work. We intersected the Lucky Shot vein, so we know where it is, and now it's time to start evaluating the exploration potential of that vein structure. On the surface, this thing, of course, was a historically operated mine. The Lucky Shot 500 level is where most of the historic production came from.
12:09 The veins can be traced over a mile at service and underground between the Coleman Attic and the War Baby Attic with the Lucky Shot in between. I also point out the N-Search tunnel on this photo. That's the exploration tunnel that was put in in the early 1980s, and that we've reoccupied to gain access to the down dip projection of the Lucky Shot vein. Looking at it in plan map here, you can see the insert tunnel there, which basically goes right underneath the historically mined area at Lucky Shot where all that dark gray material is there. That represents the underground workings. And of course, we've advanced, we've refurbished the underground, the preexisting underground workings, and then we've advanced it to intersect the Lucky Shot vein where the circle is, is where that photo was of Chris and I was taken that I showed earlier in the deck. And we've put in a western footwall drift in the footwall of the vein to begin exploration drilling.
13:20 Future plans is to put the western footwall drift in and then a
13:27 parallel drift in the hang mall so we can continue to drill down dip on the Lucky Shot vein Structure. We are an operating mine. We're fully permitted for mining. If we're not processing on-site and putting a tailings facility on-site, we really don't need any further permits. The work we did last year, this is a Northeast looking projection showing the underground workings now. You can see in the middle of the slide there, the Western drift and the 2 panels of drilling that we did We'll be announcing resources here in the next week or 2. Been working on getting the SK 1300 report done for that. So it's eminent.
14:15 The main area of course, of the Lucky Shot vein is, we drilled these, what we call the pilot holes, fairly wide spaced holes to just define where the vein structure was, so we knew where exactly to put our underground development to properly drill this from underground. That being the foot wall drift and then eventually the hanging wall drift. As we look at the overall vein structure, of course at Coleman we have about 171 drill holes. We've done proper QAQC on all that And we have got a nicely well-defined resource there. We'll be updating. These are historic resources quoted here. We'll be updating those with our own interpretations. And of course, for Lucky Shot, we only have 29 drill holes, so just keep that in mind. We don't have enough drilling to define good quality resources as we'll have at Coleman.
15:11 But now that we have that underground infrastructure in place, we'll be able to continue to drill that out. I'm Just drilling down dip from the historically mined Lucky Shot vein again. There's about 250,000 ounces that were mined in this area here from the Lucky Shot. And we're basically just looking down dip from that. And so It does require a lot of drilling. These are high grade, narrow high grade veins. They tend to run in shoots. And so that's why you need the high density of drilling to define the resources. We'll be drilling on 15 to 20 meter spacings that is close enough spacings to give us measured indicated resources that you can develop a mine plan around. The plan then would be, as I mentioned, You can see that we have the Western drift in.
16:02 We've drilled the 2 panels over on the far right of the image there. And then we put the 280 East drift in and then going out to the 2300 level, put drifts out both east and west off of the main insert chaddock. This work is planned. Obviously, we'll need to finance this. And that's the next thing coming up is to raise money so we can execute our exploration program on the Lucky Shot project.
16:37 I'll just wrap up with another good milestone that we've hit with being on the preliminary desk for the inclusion in the Russell 3000 index that was announced on May 9th, sorry, May 19th. And if you're not familiar with the Russell, it's this is from their website down below. Their capital is a capitalization weighted stock market index. They represent the top 3,000 publicly held companies, US companies, and it's based on their capitalization. It's said to represent about 90% of publicly, American public equity market. So it's a very broad index, and we're obviously very proud to be considered for inclusion on that.
17:27 The final listing is on June 26th there as noted. So I'll stop there, but I'll just emphasize on Lucky Shot, we're close to announcing our initial resource there. So stay tuned for that in the coming weeks here. Hopefully in a week or 2, we'll have that out and we'll have probably a further update call like this and I can walk you through the details of what we found at Lucky Shot based on all of our work over the last year. I'll stop there and turn it back over to you, Kyle, for questions. Perfect. Thank you. And just a reminder to the audience. I see there's some questions submitted, but keep them coming. Feel free to ask Rick any questions you'd like. Rick, we'll start off with Ben's question here.
18:21 He asked, when can we anticipate a Lucky Shot update? Yeah, so I was hoping to be able to share that with you this week. Takes a little longer to get an SK 1300 report than I had expected. So we're basically finalizing that draft report. So I'm hoping to have it out next week. So we're working hard to get that done. Perfect, and on top of that, Mark has a question about Lucky Shop as well. He's wondering what is your budget for 2023 in regards to Lucky Shop? Yeah, so the budget is gonna be dependent on how much money we will raise here. What we'd like to do is a $10 million program to basically do what I've outlined in this slide here, which is, you know, drill off the existing 290 drift and then on the east side, put that drift in and as well as the hang wall drift.
19:14 So, you know, that's a big program. We'll need to raise the dollars to do that. So we'll be, we're in the process of putting that plan together now. Thank you. And the cost per meter per Lucky Shark? Oh, that's not a number I have off the top of my head. It's on a relative basis. These are short holes. So yeah, I'll have to look that number up. I don't have that off the top of my head. Mark has a follow up question here. Do we know the price at which the Gold hedge will be placed? Short answer is not yet. I mean, obviously, if you're looking at the forward curve now, I think you're around $2,100, but the hedges won't be put in place for probably another month at least, maybe even longer.
20:04 I've got a update visit to the mine site in a couple of weeks and ING and Macquarie's are gonna be along on that trip and We'll see where the schedule is and see when we see planned production. As I said, because we've been working on the road all winter, we are ahead of schedule. That's the good news. The other part of that is we're spending money faster than the feasibility plan, if you will. So, we'll continue to update the banks on progress there and we can dial that into the overall schedule for the budget calls and all that. So a lot going on right now, but I think all fairly positive news, very positive news on Mancho especially.
20:55 Yeah, we'll pivot to Mancho here with Timothy's question. What's the remaining permitting timeline for Mancho? We are fully permitted for mine operations. Anybody familiar with mining day-to-day, you never stop permitting, you never stop getting modifications to permits or additional permits to put in culverts and what have you. But from a mining standpoint, we are fully permitted at Muncho now. The mine plan was approved. So we're in good shape there. And as I said, the mining equipment is on its, over the weekend actually was on its way to site. This is a Keywitz mining equipment. It's being brought up obviously on barge and then it's been mustered down at the main site, which I think I have an image of in here.
21:54 Right in, oops, right there. This is where all equipment's stored before it comes off the highway, and then it goes up the road up to site here. And mining site is actually right about in here. So it's on its way up there now. I'll read Kyle's question here. Seeing how you have been spending capital on constructing Manchurian since last summer, where does the remaining capital spend that is left relative to the feasibility study capital cost estimates? I think once This year's program, the second half budget is approved because we're again, because we're ahead of schedule, we'll be basically on working capital at that point.
22:42 Assuming we're, we continue to stay on schedule and stay ahead of the Feasibility Plan schedule. We should be mostly constructed by the end of this year and then it's working capital because now you're mining and operating. That was another reason why we wanted to have a nice cushion with the $70 million facility, because that's that working capital that you want to make sure you can, that working capital period that you want to make sure you can get through before you actually have goal production. And in anticipation of that question. Right now, guidance, Kinross guidance remains gold production second half of the year.
23:30 But again, we are ahead of schedule, so we're hoping we can move that up, but there's nothing official at this point. The working model is production in July, July of this year, so, sorry, July of next year, apologies. 2024, gotcha. Samantha has a question here in regards to your thought process. Why not wait until you have revenue from Manshaw to spend for developing Lucky Shop? Well, it's something to consider. And obviously we'll look at capital markets and look at the overall plan. Obviously, the old saying, time is money, so you've got to keep that in the back of your mind as well. It is an option.
24:17 Obviously, if we are able to raise the dollars, it's something we would like to get done because we think with LuckyShot, we're seeing good grade continuity in the higher grades. So that's something you could literally mine and get underway fairly quickly. So, but it's a good point and it's something that we will keep in mind and keep under consideration in terms of when do we have to, we don't have to start up Lucky shot. We're not under any sort of timeline gun there. So we'll see what capital markets can do here and we'll act accordingly. Perfect, that leads nicely into some share structure based questions here. Ron's wondering what percentage of Contango is owned by institutions?
25:08 It's roughly 40 percent and our big institutions are Alaska Future Fund, which is a subset of the Alaska Permanent Fund. Gabelli is a significant shareholder. Tocqueville's Sprott, now owned by Sprott, is a significant shareholder group out of Denver called Hexagon. Those are our main institutional shareholders. And of course, the Russell 3000, I'm glad you asked the question because this is one thing that the Russell 3000 is going to bring to us is a lot of eyes on the Contango story now, and in particular institutions that invest in the index. And then a lot of times what happens is they invest in the index and they start to take a closer look at the company.
25:58 I think with the macro view that gold is a good place to be invested in right now. I think you'll see this Russell 3000 listing opening up a lot of new eyes to the Contango story. So I'm certainly expecting to have a lot of engagement with indexed investors who will get their first exposure to Contango and will certainly be following up to convince them that they need to invest in gold And that Contango represents a great place to invest in the gold space, which is sort of that's our view from a macro standpoint. Great. Sounds like Rock might have been multitasking here during the presentation and he might have missed you mentioning this, but can you repeat when you expect to have your next capital raise?
26:51 Yeah, well, we're going to be working on it now. I think as we indicated when we signed up with the banks, one of the requirements when you enter into a credit agreement is they want to make sure that you've got enough money to execute your own business plan separate from where they're investing in, specifically in the Montreal project. So We're working on that now and we'll have a, we'll have a, we'll, when we announce, when we're doing a financing, you know, it'll be an announcement, but we're getting ready. We're certainly getting all our ducks in a row. And one of the last ducks to get in a row is the is the lucky shot initial resource on lucky shot. So again, hopefully we'll have that out next week. We're hoping to finalize it this week and get it all ready for publication as an SKA 1300 technical report.
27:50 So that's kind of the last milestone, if you will, that we want to accomplish internally. And then we'll set our minds to raising the capital to in order to execute our plan program at Lucky Shot. And obviously the banks are there for Manshaw. Great, and my apologies if you have to repeat yourself, but I do like asking every question that the audience poses here. And Kyle is wondering if the debt facility is enough for the upcoming capital calls for Manchil, or will there need to be that equity component to further finance? Yeah, we'll want to raise the equity component as well. That's definitely a part of the plan.
28:37 So yeah, that's a requirement. Alice has a question here. If rail transport of ore is used for Lucky Shot, What's the difference in cost compared to truck transport? Yeah, I mean, obviously we don't have a, you know, a feasibility level study at Lucky Shot. So these are very much forward looking statements. I guess that's where we put that in the front of the presentation, But just in general, it's roughly the same distance hauling from Mancho as it is from Lucky Shot. I think there's maybe 10 or 15 mile difference. So, but largely not too different. Real cost is about a third the cost of trucking, but you do have to handle it twice because you got to get it to the rail and then you have to get it from the rail up to the mine site at the mill facility. So In rough numbers, I'm going to say it's in the neighborhood of 40, 50 bucks a ton.
29:37 So moving things by rail is definitely a lot cheaper than moving it by truck. But you do have to handle it twice, so you got to keep that in mind. Excellent. And it looks like that's it for questions. We did receive a lot so that's great. I guess we will wrap up here. If you have questions please feel free to submit them but there is that survey too if you want to get in touch with the Catango or team go to the chat at the top there and there's that survey. But any last words for today's audience there, Rick? Yeah, I'll just leave you on this slide, the SK 1300 feasibility. It's a very meaty report. It's a long report. If you go to our website, you can get a link to download it, but it does outline what I think is a very high grade, high quality deposit.
30:28 We're on track. We're ahead of schedule. We're on budget. We've got the bank financing in place. And we do wanna raise money to continue to advance our other projects, including in focusing on Lucky Shot, which we think can be the next project that can produce cashflow. So once we have the resource out, hopefully next week, I'll look forward to updating you on that project and on our overall financing plans. So appreciate the interest and thanks again for joining us today. Late, but thank you for your time.
