Contango ORE Goes Hedge-Free, Eyes Full Gold Upside and Kitsault Silver Growth

Key Points

• Contango ORE eliminated its hedge book, converting its remaining gold hedges into debt so shareholders now have full upside exposure to gold prices. CEO Rick Van Nieuwenhuyse said the move was a deliberate strategy to benefit directly from higher gold prices.
• Management and a guest analyst described the recent pullback in gold and silver as a correction within a broader bull market. They pointed to central bank buying, oversold technical conditions, and the likelihood of Fed rate cuts as potential support for higher prices ahead.
• Contango is also focusing on silver growth at Kitsault and other projects, with plans for major drilling and a resource update soon. The company is targeting about 5 million ounces of annual silver production and hopes to grow annual gold output from roughly 60,000 ounces to 200,000 ounces over the next four to five years.

Contango ORE NYSEAMERICAN: CTGO President and CEO and Director Rick Van Nieuwenhuyse said the company has eliminated its hedge book and is positioning shareholders for full exposure to gold prices, as speakers on a metals-focused webinar described the recent pullback in gold and silver as a correction within a broader bull market.

The discussion featured Van Nieuwenhuyse and Ronnie Stöferle, managing partner and fund manager at Incrementum and part of the team behind the annual In Gold We Trust report. Stöferle said gold’s recent weakness has been driven in part by a sharp reversal in interest-rate expectations, with markets moving from expectations for rate cuts to pricing in possible hikes.

“From my point of view, we’ll rather see rate cuts than rate hikes,” Stöferle said, adding that he believes the market is wrong on the direction of rates. He said gold’s decline should be viewed in the context of what he described as a 64% gain last year in dollar terms, followed by a year-to-date decline of 5.5%.

Gold Pullback Viewed as a Breather

Stöferle said gold has reached oversold levels on several sentiment and technical measures, and argued that bearishness toward the metal could be viewed positively from a contrarian standpoint. He said Incrementum’s Active Aurum Signal moved the firm toward a more defensive position in March, leaving it with elevated cash levels to deploy into the mining sector.

He also said central banks remain a key driver of gold demand, noting continued purchases even as Western gold ETF investors remain more tactical. Stöferle framed the gold market as part of a broader “re-monetization” trend and said gold allocations among private investors and central banks remain below levels seen in past bull market peaks.

Stöferle reiterated Incrementum’s long-term gold price target of $8,900 by the end of the decade, saying that target remains realistic under its inflationary-decade scenario. For the end of the year, he said he expects gold around $4,500, with a reversal in interest-rate expectations and Federal Reserve rate cuts as the key catalyst.

Contango Eliminates Hedge Book

Van Nieuwenhuyse said Contango’s removal of its hedge book was a central objective for the company this year. He said the company delivered into its 2026 hedges with produced gold and then worked with its bankers to replace the remaining hedges with debt.

“We’re hedge-free,” Van Nieuwenhuyse said. “We want to give our shareholders and investors 100% exposure to the gold price.”

The webinar host referenced a July 6 announcement in which Contango converted the final 15,000 ounces of hedges, struck at $1,935, into debt, lowered the interest rate to 7.4% and added put protection. Van Nieuwenhuyse said the company chose to act as gold repeatedly approached the $4,000 level, which he described as a level where gold appeared to find support.

Van Nieuwenhuyse said central banks have become major gold buyers since the global financial crisis and are now buying a sizable portion of annual mine production. He linked that demand to concerns over money creation and a broader de-dollarization trend.

Silver and Kitsault in Focus

The conversation also turned to silver, which Van Nieuwenhuyse called a “drama queen” because of its dual role as both a precious and industrial metal. He said silver is used in solar panels, electronics, military applications, data centers and solid-state batteries, and noted that it is officially listed as a critical metal in several major jurisdictions.

Van Nieuwenhuyse said Contango’s Kitsault Valley project has high-grade silver mineralization in the Golden Triangle, with average silver grades above 300 grams per tonne. He said he believes the project could produce silver at about $25 per ounce and, at startup, potentially produce 5 million ounces of silver annually.

He said the company expects a mineral resource estimate later this month and is targeting close to 100 million ounces of silver plus 1 million ounces of gold. Contango is drilling about 40,000 meters at Kitsault this summer, he said, with the goal of having a preliminary mine plan for the district by this time next year.

Stöferle said silver’s fundamentals remain supported by a multi-year supply deficit, limited new production growth and the fact that much of silver output is a byproduct of other mining. He said the gold-silver ratio has not yet reached levels typically seen near the end of secular gold bull markets.

Project Development and Cash Flow Plans

Van Nieuwenhuyse discussed the Johnson Tract project in Alaska, which he said is on the FAST-41 permitting dashboard. He described the process as a transparent way to coordinate federal permitting timelines and said it is working well for the project.

He said Contango expects to submit its formal application for Johnson Tract in early 2027 and receive major construction permits by mid-2028, assuming the company completes required studies and filings on schedule.

Van Nieuwenhuyse also highlighted Manh Choh, where Kinross is the operator. He said Contango’s model is similar to a royalty company in that Kinross performs the operating work while Contango uses cash flow to advance Lucky Shot, Johnson Tract and Kitsault. He said the company expects to produce 75,000 to 80,000 ounces of gold next year and generate about $200 million in free cash flow if gold is at $4,000.

Contango’s stated strategy, according to Van Nieuwenhuyse, is to grow from about 60,000 ounces of annual gold production to 200,000 ounces over the next four or five years while adding 5 million ounces of annual silver production from Kitsault.

• At Lucky Shot, Contango plans 20,000 meters of drilling this year.
• At Kitsault, the company plans at least 40,000 meters of drilling.
• Van Nieuwenhuyse said the company could use future cash flow to acquire additional assets that fit its direct shipping ore model.

Van Nieuwenhuyse said the market is not fully recognizing Contango’s projects, particularly Lucky Shot, which he said could potentially generate 40,000 to 50,000 ounces of annual gold production with additional capital investment. He said the broader gold mining industry’s margins are much stronger than in past cycles, describing the business as attractive at current gold prices.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.