Contango ORE Fireside Chat: Metals Pullback Meets Defense, AI Demand Tailwinds

Key Points

• Mining executives framed the recent pullback in gold and silver as a normal correction within a broader bull market, not a trend reversal. Contango ORE’s Shawn Khunkhun said higher prices and strong sector performance still leave bullion miners with attractive margins.
• Defense and AI-linked demand were highlighted as major tailwinds for critical metals like silver, tungsten and copper. Panelists said military applications, U.S. supply-chain concerns, and data-center/infrastructure buildouts could keep demand elevated even amid price volatility.
• Executives pointed to tight supply and strong project economics across several companies, including Contango’s cash flow outlook, Guardian Metal’s tungsten project NPV, and Pecoy Copper’s long-term copper deficit thesis. They also said government support for critical minerals is broadening through funding, permitting reform and defense-related investment.

A panel of mining executives said recent volatility in precious and critical metals should be viewed in the context of still-elevated prices, while pointing to defense demand, artificial intelligence-related infrastructure and constrained project pipelines as key themes shaping the sector.

The discussion included Shawn Khunkhun, president of Contango ORE NYSEAMERICAN: CTGO; Vincent Metcalfe, president and CEO of Pecoy Copper; Christian Aramayo, COO of Kuya Silver; and J.T. Czarnecki, executive chairman of Guardian Metal. The moderator opened by noting that gold was trading just under $4,000, silver was in the mid-$50s after briefly trading in triple digits earlier in the year, copper was near all-time highs and tungsten had moved sharply higher after China restricted exports.

Precious Metals Pullback Framed as Normal Correction

Khunkhun said he viewed the pullback in gold and silver as a normal correction within a broader bull market rather than the start of a more negative cycle. He said gold was still up 20% over the prior year and the GDXJ was up 40%, adding that investors should keep the move in perspective after what he described as a “monster year” in 2025.

“If you look at historic bull markets, 20%-30% corrections, even 50% corrections of either the metal or the equities are par for the course,” Khunkhun said. He added that the typical signals of a bull market peak, including equities dramatically outperforming metals, had not appeared.

Metcalfe, who said he spent most of his career in gold before moving into copper, said margins for gold companies remain strong at current prices. He noted that investors once discussed $200 to $300 margins for gold companies, while at $4,000 gold, “the margins are insane.”

Defense Demand Highlighted for Silver and Tungsten

Aramayo argued that defense demand for silver is underreported because military usage is often not broken out in public data. He said silver is used in critical connectors, precision-guided munitions, submarines and hypersonic weapons, and noted that the U.S. imports 64% of its silver. He said global military spending had reached almost $2.8 trillion in 2025 and described silver’s addition to the U.S. Geological Survey’s critical minerals list as a national security signal.

“The market has separated silver into two assets,” Aramayo said, describing one as monetary silver and the other as industrial and defense-related silver. He said industrial defense demand “hasn’t corrected at all” and is accelerating, even though it is difficult for analysts to quantify.

Czarnecki said tungsten has been one of the most dramatic movers among critical metals. He said tungsten historically traded between roughly $29,000 and $32,500 per ton, compared with about $305,000 per ton at the time of the event. He attributed the move to China’s export restrictions, U.S. defense needs and a lack of domestic production.

Czarnecki said tungsten is used in fighter jet counterweights, armor-piercing munitions and other defense applications. He also pointed to legislation that bans defense-related tungsten products from China, Russia and North Korea beginning Jan. 1, 2027.

Copper Pipeline Seen as Structurally Tight

Metcalfe said copper’s long-term outlook remains structurally deficient, even though the refined copper market is currently close to balanced. He said the market is around 28 million tons per year and may require an additional 7 million to 14 million tons by 2040, depending on the source.

He said new copper mines can take 17 to 20 years to move from discovery to production, and many major projects have remained on the shelf for years due to community, metallurgy or permitting challenges. Metcalfe said the rise of artificial intelligence infrastructure has added another layer of future copper demand that the broader market may not fully appreciate.

Discussing Pecoy Copper, Metcalfe said the company’s project in southern Peru benefits from low elevation, proximity to infrastructure and mining communities familiar with the sector. He said Pecoy is drilling 40,000 meters across its Pecoy project and a second project, Tororume, with the goal of establishing the deposit’s scale before advancing economic studies.

Company Executives Outline Project Catalysts

Khunkhun discussed the combination of Dolly Varden and Contango, saying the structure paired a high-grade silver developer with a cash-flowing gold producer. He said the goal was to create an emerging mid-tier name in a market where investors often choose between large producers and underfunded juniors.

Khunkhun said Contango has cash flow, $100 million in the bank and development-stage assets in its pipeline. He said the company is generating about $100 million a year and could approach $200 million of free cash flow in 2027 if it executes on its plan. He also said the Johnson Tract project has a $600 million net present value at $4,000 gold, which he compared with the company’s market capitalization at the time.

Czarnecki said Guardian Metal’s Pilot Mountain project in Nevada has a completed preliminary feasibility study showing a $660 million net present value at a discounted spot tungsten price. He said the project’s capital expenditure estimate is $288 million and described the economics as among the strongest he has seen in his career. He also said the company has a second tungsten asset about two hours away with existing infrastructure.

Aramayo said Kuya Silver’s operating decisions at the Betania mine are driven by geology rather than day-to-day silver price moves. He said the company is targeting a ramp-up from 100 tons per day in March to 350 tons per day by year-end and is also undertaking a 20,000-meter drill program. He said the company used stronger silver prices to strengthen its balance sheet, allowing it to continue development during the correction.

Government Funding and Junior Equities

Czarnecki said U.S. government support for critical minerals has evolved beyond direct funding and now includes permitting reform and different financial instruments across agencies. He said Guardian Metal’s Department of Defense investment was initially approved under the Biden administration and requalified under the current administration, which he cited as evidence of bipartisan support for critical minerals.

Khunkhun said the valuation gap between metal prices and junior equities is beginning to close. He said the typical cycle starts with royalty companies and large producers, then moves toward developers and eventually explorers. He added that institutional investors are increasingly looking at permitted developers, while the broader junior market remains far from what he would consider a speculative peak.

About Contango ORE (NYSEAMERICAN:CTGO)

Contango ORE Royalty Trust (NYSE American: CTGO) is a grantor royalty trust that holds net overriding royalty interests in oil and gas properties. As a non‐operating entity, the trust itself does not engage in exploration, drilling or production activities but instead receives a percentage of revenues generated by producing wells. This structure offers investors exposure to commodity price movements and production volumes without the direct capital expenditure or operational risks associated with upstream oil and gas companies.

The trust's assets consist primarily of royalty interests in offshore leases located on the continental shelf of the Gulf of Mexico.

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