Contango ORE Corporate Update

0:08 Good morning or good afternoon, depending on where in the world you're signing in from today. And thanks as always for joining us. Today, I'm pleased to have on Rick Van Doornhuyzen, Contango OARS CEO and Mike Clark, company CFO, discuss this morning's press release. Gentlemen, how are you today? Doing well. Morning. Awesome. So here's how today's gonna work. I'm first gonna throw it to Rick for a quick kind of State of the Union based on this morning's news. Then I'm gonna jump back on, go through a few questions, including some that came in advance via email. But then I'm going to get into questions from the live chat. This is an interactive event. Please feel free to enter questions for Rick and Mike at any point during today's event, just using the chat in the bottom right of your screen. We'll get to as many as we can. But if for Whatever reason we don't get your question today, I'll make sure that the team gets them so that they can respond to you just via email or call soon thereafter. Last piece of housekeeping is today's event is being recorded and will be available for replay this afternoon.

0:59 Very likely by 2 or 3 in the afternoon Eastern time, it'll come right in your inbox, and at that point you can share it. It'll be up on both YouTube and events. That's 6. But without further ado, I'll throw it to Rick to get started.

1:12 Thank you, Romeo, and thank you to 6 for hosting our webinar today. Yeah, Important press release out. Obviously, it's taken a little longer to get this out than we really wanted to, but we have come to an arrangement with our lenders on rescheduling the hedge delivery dates and the debt repayment schedule. So a lot of this obviously is really the job of the CFO. So you'll be hearing a lot from Mike today. You'll probably answer most of the questions and and I'll probably chime in here and there. But so without any further delay, Romeo, why don't you go ahead and start with the questions?

1:59 Awesome. So I got a quick number And Mike, this is going to be a bit of a grilling for you, as Rick foreshadowed. So we're going to hit you with a bunch. And then we have some that came in over email in advance too. I will get to those and then jump into the chat. So first, originally distributions were around $50M from the JV. Do you see any change in coming from that? Yeah, no, the original distributions were forecasted by Kinross were based on a $2,500 gold price. So with gold currently above $2,900, we would expect those distributions to increase. Typically, at the end of each campaign, after a couple of weeks, Kinronos will go through their forecasting and budget budgets to come up with what the actual distribution will be. So I would expect we should find that out in the end of March for the first campaign of this year.

2:46 Great, and Dimash, I appreciate that. And 1 clarification just from reading it,

2:52 before Contango was exposed to 40% spot prices and now only exposed to 30% spot prices. Can you explain what the dynamics are there? Yeah, it's a combination of a few things. The 40% was always based on the Feasibility Study, which at the time had higher production in 2025 than what we're currently budgeting. In addition to that, we actually produced more in 2024, which kind of took away from a lot more Gold that would have been produced in 2025. And so we actually only, we were only about 50% hedged in 2024. And then with the kind of the extended kind of ore haul plan, you'll just see kind of the production stretched out over a longer period of time. So, life of mine it doesn't change much.

3:38 But for the next 2 years, we're going to be about 30% unhedged or 30% unhedged. And then in 2027, when we pay this off and deliver those last ounces, it comes out to about 80% unhedged that year, and then unhedged thereafter. So it's really just kind of moved like it's Yeah, just shifted over slightly. No sense.

3:58 And what did the lenders charge you for this restructure? There's no charge to make the amendment. It's just a matter of re-sculpting everything to make it work. No change in the interest charge. Great. Okay. And it was a tough question, obviously, to answer just to the best of your ability. Do you anticipate having to do an equity raise in the near future? No, the way this was re-sculpted or re-contoured, however you want to word it, it was based on current gold prices and forecasted costs. We anticipate we should have enough money to make all the principal repayments and deliver the hedges without having to do a big equity raise. Great. Other one, this is just from my perspective. So, you know, forgive the tell me, but why did this take so long?

4:43 I guess I'll start with this. Rick might have his opinions, But I think the main reason this took so long is, first of all, we extended beyond the original maturity date, which requires a certain level of due diligence to be conducted by the lenders to get it through their risk departments when you go beyond that date. And then having this happen over Christmas and then having the costs go up slightly on the tolling and processing that we announced at the end of Christmas, there was a bunch of factors that came into play. Then you throw on having 2 sets of lenders and It's just another set of parties to go through. And then the due diligence from a third party engineer that required about a month of work or a little more than that. All those factors just ended up taking the better part of 2 months. And then finally, documenting.

5:34 You think it'd be simple to change your principal repayments and your hedges slightly. There's still a fair amount of documenting to be done and thought to go into it, just to make sure you're not going offside with your covenants or anything like that, which we're in compliance on. But that took a little more than we anticipated. And originally, our goal was the end of January and we're 2 weeks into February, so it could have been worse, but we finally got there. Rick, anything to add to that? Yes, I just say, working with 2 bankers, they're not 100% aligned on everything. They're both Dutch bank and Australian bank, so they just view things differently. That certainly was part of the factor and it's probably something we didn't really anticipate because we kind of view it as

6:22 one aspect of debt repayment and delivering to the hedges. So definitely took longer than we all anticipated, but I think very happy with the result we have. It does basically just spread the hedge delivery out over another 6 months, essentially. But as Mike pointed out, in 2027, which is a very strong year for gold production. You know, we're only 80 percent unhedged, only 20 percent hedged, I guess you would say it that way. Yeah, that makes sense. And I got one big question for what this means for this year. Is this restructure going to allow you to do any work this year on Lucky Shot and Johnson Track just so we get a bit more info there?

7:13 I'll start on this. But currently the way we've forecasted and budget is we've allocated a couple of million bucks to go towards permitting at Johnson Track. And that's the primary focus right now. So that's all that's currently allocated. Rick, do you want to add anything to that? I'll jump in because I think the important next step at Johnson Track specifically is permitting. And so, as you know, last year we permitted the road. We received the 404 permit to construct the road between camp and the future portal site. So we can get underground and do the proper exploration and feasibility level work to get to evaluate the ore body from underground. Again, we do anticipate that this will be an underground mine.

8:01 But the other set of work that has to be done on permitting is permitting a road down to the coast and permitting a barge landing site. Very good news there is that CERI received their easements for both the road, the road easement and what's called the port easement

8:23 at the end of the year. And so now that allows us to go through the formal permitting process. We're getting a programmatic agreement in place, which kind of is a document that sort of outlines how the permitting will proceed, how the planning stage, the execution stage, and then goes all the way through closure. So it's a very comprehensive document. That's being finalized. And then once that's finalized, we can initiate the formal part of permitting. Again, both the road access down at the coast

8:54 and the barge landing site. Lucky shot is already fully permitted. So the next big step we wanna take on both projects and this is, you know, given the cash flows that we're anticipating, the next big step we want to take is let's find a home where to process these 2 great ore bodies. So we are spending a fair bit of time on that, which isn't, you know, it doesn't cost a lot of money, frankly, but it's a lot of conversations with the existing facilities that, that with either as is or with some modifications can accommodate both or bodies. So that's going to be the focus for the year, that and permitting as we just discussed.

9:41 Great, I appreciate that. There's one question from the chat that I'll throw in here before I get to some of the emailed ones. Mike, it's definitely for you. And let me know. But if you need to drag up some docs, let me know. But it's what are expected total cash flows to Contango from Moncho for 2025 through to 2028? And as additional details are the cash flows net of taxes and debt amortization. And he says you can use 2500 or 2900 spot price to clarify which assumption. I'm putting you to work here, Mike. I don't have all those numbers in front of me. So basically what we have right now is we have our detailed mind plan from Kinroth for 2025, which is what we're using. Outside of that, all we really have is kind of feasibility study level kind of work. And so for 2025, we published that we've, the distributions were currently scheduled to be about 25, or sorry, $50 million. We think there'll be higher at current prices, assuming they stay there.

10:37 Those are pre-tax numbers and that number does not include your hedge loss that you're when you're delivering these hedges. So there's going to be, you know, $20M to $25M there probably going to the hedge loss. But from a tax perspective, we do have losses. And so currently we're not forecasting any major taxes in for the next couple of years. Now, we're still working through that and it's not as straightforward as just saying, you know, we have this many losses we can offset because there's rules on how you apply it and there's actually only 80% of your losses you can actually apply to your income in the year. So, there's always potential for small tax bills at the end of the year, but we're structured in a way that can hopefully offset that with other costs in the company.

11:27 We're working on that right now. It's not something I have answers to. Going forward, we've talked about what we expect our free cash flows to be in 2027 and 2028 in the press release, which was pretty high level and based on US$2,500 Gold. And I think that was US$80M and US$70M for the 2 years. And a lot of that just has to do with the fact that mining costs come way down in those years. And then for 2026,

11:57 there wasn't too much free cash flow, basically because a lot of the money is going towards the principal and the hedges. I don't know if I've answered your question clearly, if I missed anything. Rick, do you want to jump in? Yes. I think that kind of covers it. The big cash flows are going to come in a lot of years when you've already mined a lot of the material and you're basically just transporting it. So that's just a consequence of the overall mine plan. And that's fairly typical

12:30 for a mine that has a five-year mine life. Sure. And Chris, I'll deliver your question exactly as written to the Contango team. So if there are any follow-ups, I can get back to you. But I think that did mostly answer the question. The one thing I'll add, Romeo, is in 27 and 28, we will probably have exhausted our losses at that point. So you could start assuming some taxes, but again, if you're spending money on the other projects that we have, then those costs will go against it. But until we get there, we just don't have those answers. Right, that makes total sense. One question that came in over email is that they mentioned Kinross reporting had positive comments about exploration at Mancho. They'd love to know if you can comment on that or if you have any related information. Sorry I missed the question. Got some background noise here. All good. This is about Kinross comments about exploration at Mancho. They just want to know if you have any related information.

13:24 No, we don't really have any significant results to report from the 2024 drill program. A lot of that work was spent, a lot of that effort was spent on, I'd say target generation on the rest of the property. There was some drilling done, but it was kind of very targeted, a few holes here, a few holes there on existing targets, what I would say sort of a long strike and down dip. We certainly think that's where the effort needs to focus, you know, again, short mine life. So Let's extend it by a year or 2 by doing some work between the pits. There's some interesting areas as we've all talked about in the past, the 2 North zone and Main zone dip towards each other. So what's in the middle?

14:15 And then of course, as in any ore body, just incremental growth along strike and down dip is where we think the focus ought to be. So we'll have our joint venture meeting here in March, is typically when we have it, to discuss the drill program for the year, the exploration drill program for the year. So hopefully we'll be able to update people once we have that set. Awesome, appreciate that. One question, this is, it's about the bridge And somebody wrote in asking with the Trump admin, can you appeal to get the bridge weight increased?

14:54 Yes, sorry you came in really broken there, Romeo. Can you repeat the question? Yeah, All good. Somebody just wrote in a note that with the new Trump administration, is there a potential to appeal to get the bridgeway increased? Oh, yeah. I actually don't expect it to be an appeal at all, but because at the very end of the year, the Alaska State Department of Transportation and the federal government DOT actually came to an alignment on accepting what they call the STIP plan, the state transportation plan. So with that, the money now is allocated to do the repair work on the Chena floodplain bridge.

15:42 And so they'll undertake that here the next over the next couple of years. That should result in eventually a total lifting of the weight reduction that was put in place. I also understand that because they now have an end date on when the bridge will get repaired, that they'll be doing another evaluation step and saying, okay, now we know that bridges can be repaired by such and such a date. That's part of the calculus that goes into determining whether there should be bridge weight restrictions at all. So,

16:17 it's a dynamic process. It would have been nice to have had those, that budget approved, you know, last September or whenever, but that wasn't in the cards. And it just, just to make sure it's clear, we're not magically going to get another 10 tonnes on the trucks. We're going to have small incremental improvements from the bridge weight if their bridge weight restrictions come off, we'll have, you know, there were other factors that went into the overall sort of net efficiency of the truck transport, how many tons of actual ore were being transported, not of ice and snow and mud. So we'll make incremental improvements there just by in the wintertime knocking the ice and snow off as frequently as you can.

17:09 Same in the summertime with the mud. They have a wash station that they'll set up before the trucks get on the highway. Most of the ice and snow and mud get picked up on the road between the mine site and the highway. Once you're on the highway, it's, you know, you're generally, you know, you're gonna, if it's a snowstorm, obviously you're gonna pick up ice and snow before that's cleared off. But that is the, you know, that's the Department of Transportation's job

17:34 is to clear the highway of ice snow. So those are the mitigating steps that will take place that we can control, trying to knock the ice and snow off before you get on the highway and then a wash station to clean the mud off. The other, so those are incremental, not quite 2 tons a piece, but they're kind of in the 1 to 2 and a half, 3 tons, each of those. And then the other one is moisture content.

18:01 And obviously in the winter time, there's no water water, so it's all frozen. So the steps that will, they'll take place this summer is to get proper drainage around the stockpile area and around the bottom part of the pit. I think we lost Rick for a second. Just reduce the amount of moisture that you're picking up. So all those are small incremental steps that you typically do with any mining operation. You find out what the issues are, and then you figure out a plan to address them. And in our case, a lot of the costs are related to the transportation. So

18:46 the mining is actually going pretty smoothly and pretty much on budget and on schedule. So the focus is on this, on the overall transportation plan, making that efficient and cost-effective. No, appreciate that update. And Lucien and Paul from the chat, I think that should cover your questions too, but let me know if you have anything specific. Aiden asks, as kind of a corollary to that, what impact, if any, occurs when the bridge is being repaired? So will there be reduced haulage rates if the bridge traffic is slowed or closed for periods of time during repairs? Not anticipating anything. Obviously, traffic will slow down.

19:22 But that's Alaska, all along the highway, that is pretty typical what you see. You've got a good 4 month of construction season, 4 or 5 months of construction season. So Alaska highways are, people who drive Alaska highways are used to that. And that was part of the original, when we had the original feasibility plan in terms of how many trucks a day and, you know, how there was, there was, that was factored in that their road repairs are ongoing. And like say it's constant in Alaska. We've got a 4 or 5 month period to fix the roads. And so that's pretty typical.

20:08 I'll also say that, you know, we are, and I think I've talked about this before, there's a self-imposed cap of 60 trucks a day. And we're maintaining that. We're not trying to go above that.

20:26 So the effort is really into getting as close to the 50 ton limit as we can with working out these efficiencies. And obviously the bridge rate restriction is part of that. So if they relook at the math, if we look at the calculus and say, okay, well, we don't need to have that extra

20:49 bridge rate restriction, then we can take that off. And keep in mind, there already were bridge weight restrictions in place. This was a further bridge weight restriction that was placed last last fall. So, Sure. That's helpful for people to remember. One question in the chat, Christian just asks, discuss short position. It's a little baffling. So I think we did get a question in email about it as well. So I'd love if you could speak of and about your shorters. Well, love to hate on the shorters. Obviously, they're betting against the company and I'd love to squeeze the hell out of them. I think last year was a successful year in terms of gold production. We produced more gold than we said we would. We guided towards between 30 and 35.

21:38 You take the midpoint, 32.50 and we produced 42. So almost 10,000 ounces more than scheduled in plan. So the bridge rate restrictions and the other incremental, I'll call them or ton losses,

21:58 compared to the feasibility study were definitely a hit. I personally think it was an overreaction. I chose to buy shares on that reset price. I think the shorts have it wrong. I think we've got a good mind plan. Kinross is a good operator. They've been in Alaska for 25 years. We hear all the, you know, they're shutting the road down. They're going to take the bridge out, or, you know, There's no other way to get there. None of that's true. And this is one of the main arterial highways to get everything into Alaska. You know, and I'm talking about, you know, food and fuel. So There's no way that that road is going to get shut down.

22:49 It's a very important highway for Alaska.

22:53 And I think as long as we're operating under legal loads and legal truck drivers and all that, I think we're in good shape. Mike, I don't know if you have anything to add there. No, no. I think that was good. Nothing to add. Mike, I got one for you. Just that's towards the top of the hour. I apologize. I missed it. TB just wants to know how much cash is in the bank right now for Contango? Cash in the bank, we just made a principal repayment at the end of January for about $14 million. I think we finished the year around $20 million. I think our cash today is a little over $3.5 million today.

23:35 This is probably the tighter part of the year, but we expect our distribution at the end of March, which we'll get our cash higher up there. And I think our first 3 batches, our first 3 campaigns are much bigger than the fourth campaign for this year. So the majority of the distributions are gonna be front-end loaded. Great. Christian from the chat asks, what's the timing for production at Johnson Tract in a best and bad case scenario? Yeah, I mean, it's obviously a bit early to get too predictive here. I'll say this, but we have a five-year plan. I think we're still on target for a five-year plan to get this into production. Next steps as we've discussed, I say our two-fold permitting effort on the easement, the road easement and the port, what we envision as a barge site easement.

24:37 With the easements in place now with Siri, and those are easements from the federal government to Siri for the right of way to construct a road and to build

24:50 a barge landing site. So that's really the, on the one side, it's all about permitting right now to stay on track. And then I think the other important thing is, as I mentioned earlier, let's find

25:07 a mill that can process this ore and if it can process this ore and lucky shot as well, then that's kind of a double win. There are some mills out there like that. So we're having those discussions now. And that those 2 things will be the focus for this this year, 2025. Great. Thank you. PDX Stock Guy from the chat asks, he's got kind of 2 questions, but I'll throw it in as 1. Yes, is the main priority to pay down debt? And if that is paid off early, can we float the spot gold price?

25:46 I'll start with that, but 2 priorities, delivering to the hedges and pay the debt off. And no, so the answer to the question is no, paying off the debt doesn't free you up for spot price Gold. The delivery of the hedges does that. Mike, do you want to clarify that? I think you answered it well. Our objective is to make our payments and if we outperform what our current forecasts are from a cost perspective or a production perspective, which we kind of hope we do, we'll look to pay things off earlier as much as possible. And I think, you know, and if it goes back to where we were on the original plan and delivering all that into 2026 and being done by the end of that year, then great. We'll do that.

26:36 Awesome. A couple of questions from Dr. John in the chat. A great, great screen name, by the way. Is there any hope for a stock price improvement? So what's going to turn the stock around? Basically the thrust of this question. Yeah. I mean, I think getting rid of the shorts will help squeeze the shorts. And I think one piece of information that can help with that is putting value on Johnson Track. I don't think we get a lot of value for Johnson Track. It is a fantastic ore body. It's great. It's good grade. As an ore body goes, it's a simple ore body from a mining standpoint, from an underground mine.

27:14 And we are finalizing the PEA, hoping to have that out in March. I'm hoping for, I know we're going to get a good result, but you've got to do the work. And we want to do a good quality PEA that really captures how you would go about mining this using a, I'll call it a third-party mill, an existing mill somewhere else. That's the plan. That's the evaluation work that we want to do. And I think you'll see that this is a very, very valuable ore body and that it really supports that the model we have, we call our hybrid Royalty model, using a direct shipping ore approach, really makes sense for a junior miner. It's a tough business trying to get things permitted.

28:05 And so if you can reduce the permitting load by not building a mill in a tailings facility, that certainly will help. And I think will be a huge value add, including the cost to get transport to the mill and for whatever the cost of the mill is going to be, whether it's a toll arrangement or whether you acquire the mill or whatever. So those are, you know, we're looking at all those scenarios. But I think you'll see that both Lucky Shot and Johnson Track fit really well into this model and will be huge value adds for the shareholders. Awesome. Thank you. C.W. From the chat asks, have any royalty payments to the Tetlin tribe been made from Mencho? Yes, short answer is yes, they're made on a per batch basis. And those are paid out of the joint venture.

28:59 Great. A couple of questions at the end here from Christian. Just generally, how does the new Trump regime help Contango? Generally, is it positive for the company? Yeah, it's on permitting. I mean, obviously, if you've got a federal government that views mining as a value add for society, then that's a positive. I don't think we had that with the previous administration, especially in Alaska. I mean, we had, I think it was 82 specific executive orders that were targeted at shutting down resource development in Alaska. So yeah, it's a breath of fresh air having an administration that actually sees the value that mining can contribute to society. And This includes meeting the objectives of a 0 carbon energy and transportation future. I mean, you can't get there without mining. I think some folks in the previous regime understood that, but not enough to actually make a difference. Like I said, there were 82 executive orders specifically shutting down Alaska mining and energy. So that's a big change.

30:16 I'm hoping that with an alignment in Congress, with the Senate and the House and the executive all focused on permitting reform, that they can actually get true permitting reform done. I think that will be a huge positive for all things permitting. And that doesn't, it's not just mining, it's about permitting windmills and solar plants and nuclear power plants, all the things that we need to meet the future energy demands and the future demands on metals as a result of that, the increased energy demand. You can't look at this equation and not get there without a lot of mining. And if you want a domestic supply chain, control of your domestic side from the whole supply chain, otherwise you just got to recolonialize Africa and be done with it. There you go.

31:20 One question from the chat, and this is on strategy. Have you given any thought to spinning out advanced projects as a new spin co? Yeah, actually, I don't think spinning out, you know, Lucky Shot or Johnson Track, which are the 2 that I consider advanced projects. We do look at our early stage assets and we kind of think they don't really fit anymore with the approach that we're taking with using a DSO and the hybrid royalty model approach. So that's something I think we'll be working on. I'd say it's not the first priority and that continue to advance the Johnson track permitting is certainly first priority in terms of our advanced projects. But that is something that we are taking a look at.

32:10 Now, and I'll just take this off to say, there's a lot of ways to skin the cat in the sense that, you know, we can demonstrate that John's FAC is a very viable project and, you know, with a high NPV, we can have a discussion to acquire a mill or we can have a discussion to have former joint venture to develop it. So I think there's a lot of things on the table that we can take a look at here that don't require a huge amount of outflow of cash. So I would just caution investors and shareholders not to assume that we're going to go pay a bunch of cash to go buy a mill. We're not going to just hand over the keys to Johnson Track.

33:01 It's The NPV of the project will demonstrate that it's very viable and that'll set a milestone for that value. Awesome. I appreciate the insight into strategy. I think it's always helpful. Mike, it looks like the last question is for you. Bevan asks, what is the company's current debt level? Current debt level? Our debt is currently at $38M. That includes our last principal repayment at the end of January. And then I consider our hedges kind of debt in a way. And so we ended up actually buying out our January 31st hedges in December when Gold was down at $2,600. So we bought those out, those 16,000oz out early, which I think generated a little over $3M to us as an overall benefit.

33:51 And so we bought those out in December, which kind of formed part of the whole formula with the restructure. But that brings our ounces, our Gold ounces that are hedged to about just over 86,000oz. So those are the 2 items related facility. And then we have a 20 million convert with Queens Road Capital that matures in 2028. Great, thank you. And we got one last comment from Dr. John the chat, hate those shorts. There you go. Gentlemen, thank you so much. I think this is great. And there are a lot of really good questions. I think we got to them all, but I will send the full transcript over. Just in case we missed anything, please do reach out and we'll make sure that the Contango team gets back to you as soon as possible. But Rick, I'll throw it to you for a final word before we jump there. Yeah, thanks, Romeo. And again, thanks, 6, for hosting this webinar and our investors for tuning in.

34:39 Yeah, I think, obviously, it's a bit of a reset with the adjusted mine plan. But we're delivering the same amount of gold over a longer period of time. And thank our lenders for working with us to accommodate that at no cost. I think that's a big win. And We'll focus on advancing the Johnson Track permitting and looking for a mill to process both our Lucky Shot and Johnson Track ores over the course of the year here. And look forward to reporting and updating shareholders on that. And let's go squeeze the shorts. There you go. Rick, Mike, thanks so much for today. Looking forward to seeing next news that's up. Thanks.

35:29 Thanks. Cheers.