Contango ORE Q2 Earnings Call Highlights

Key Points

• Manh Choh production is expected to accelerate in the second half of 2026 as mining shifts to higher-grade South Pit ore, supporting full-year production of just over 41,000 ounces and lower cash costs of approximately $1,900–$2,000 per ounce.
• Contango eliminated its gold hedges in July, giving shareholders direct exposure to spot prices. Management projects roughly $36 million in joint-venture cash distributions during the second half of 2026 at a $3,700 gold price, with total 2026 distributions potentially exceeding $60 million at higher prices.
• The company is advancing growth projects, including drilling at Lucky Shot toward a 2027 feasibility study and completing a major Kitsault Valley drill program focused on its silver-rich assets; it also reported $89 million in cash and sufficient funding for planned work over the next 12 months.

Contango ORE NYSEAMERICAN: CTGO, which management referred to during its quarterly update as Contango Silver & Gold, said it expects stronger production, lower costs and increased cash distributions in the second half of 2026 as mining advances into higher-grade material at the Manh Choh joint venture.

Chief Executive Officer Rick Van Nieuwenhuyse said the company has expanded its portfolio through the addition of the Kitsault Valley assets, including the Dolly Varden project, while also eliminating its gold hedges as of July. He said the company is now positioned to provide shareholders with direct exposure to gold-price movements.

“We’re generating strong cash flows,” Van Nieuwenhuyse said, adding that the company expects its better production periods at Manh Choh to occur in the second half of 2026 and in 2027.

Manh Choh Production Expected to Accelerate

Chief Financial Officer Mike Clark said Contango’s 30% share of Manh Choh production was about 8,900 ounces during the reported quarter, while 8,627 ounces were sold at an average spot price of $4,328 per ounce. The operation had been processing lower-grade material from the North Pit while completing pre-stripping work at the South Pit.

Clark said the company expects to produce roughly 12,000 ounces in each of the third and fourth mining campaigns, which would bring full-year production to slightly more than 41,000 ounces. That outlook remains within Contango’s 2026 guidance range of 40,000 to 45,000 ounces.

First-half cash costs were $2,665 per ounce and all-in sustaining costs were $2,830 per ounce. However, Clark said full-year cash-cost guidance of approximately $1,900 to $2,000 per ounce remains intact.

The expected second-half cost improvement is primarily tied to the completion of South Pit pre-stripping and the transition to higher-grade ore and higher processing volumes, Clark said. “The pre-strip is behind us,” he said.

With hedges no longer in place, Clark said the company’s gold sales will be priced at spot beginning in the third quarter. The company retains put options at $3,100 per ounce, which he characterized as insurance rather than a core part of the company’s price outlook. Contango budgets at $3,700 gold, he said.

At a hypothetical $4,400 gold price and $2,000 cash cost, Clark said the implied margin would be about $2,400 per ounce. He projected approximately $36 million in joint-venture cash distributions during the second half of the year using a $3,700 gold price. If gold were to average $4,400, he said distributions could increase by an additional $7 million, bringing total 2026 distributions to slightly more than $60 million.

Lucky Shot Work Supports 2027 Feasibility Study

Contango completed the purchase of mineral claims, a 2% net smelter royalty, property and equipment associated with the Lucky Shot project from Alaska Hardrock Mining & Blasting on July 1. Van Nieuwenhuyse said the transaction gives the company ownership of the underlying patented mining claims and reduces royalty exposure at the project.

The company is conducting underground and surface drilling at Lucky Shot as it compiles geological, geotechnical and assay data for a direct-shipping-ore feasibility study. Van Nieuwenhuyse said Contango is targeting a resource of 400,000 to 500,000 ounces of gold with grades in the range of approximately 10 to 15 grams per ton.

Management is evaluating ore sorting as part of the development concept, which could reduce the amount of non-mineralized material transported from the site. The company is also assessing potential processing options, including the Fort Knox mill, while noting that other alternatives are under review.

Drilling is expected to continue through approximately March 2027, with the feasibility study anticipated in 2027. Van Nieuwenhuyse said final underground drilling assays included an intercept grading 972 grams per ton gold with visible gold in the core.

Kitsault Drilling and Silver Focus

At Kitsault Valley, the company had completed more than 35,000 meters of a planned 40,000-meter drill program by the end of June. Five rigs are operating at the project, and Van Nieuwenhuyse said drilling efficiency could allow Contango to complete an additional 5,000 to 10,000 meters within the existing flow-through financing budget.

A new resource estimate is being prepared, while initial drill results were expected within about a month of the call, followed by additional results every two to three weeks. Van Nieuwenhuyse said the integration of the Dolly Varden team had proceeded well.

He described Kitsault as a silver-centric district, saying silver accounts for about 90% of value at the Torbrit, Wolf, Dolly Varden and North Star areas. The company’s five-year objective is to produce 200,000 ounces of gold and 5 million ounces of silver annually, with the targeted silver production expected to come from the silver-focused portion of the Kitsault district.

Balance Sheet and Johnson Tract Progress

Clark said Contango ended the quarter with $89 million in cash and has only $2 million of facility repayments remaining for 2026. He said available cash and expected Manh Choh distributions are sufficient to fund planned work at Kitsault, Lucky Shot and Johnson Tract over the next 12 months.

The company expects cash to finish 2026 at approximately $45 million and to reach its lowest level in the first quarter of 2027 before increasing as Manh Choh production ramps up, according to Clark.

At Johnson Tract, Van Nieuwenhuyse said permitting under the FAST-41 process is progressing according to schedule. The company has been building roads and bridges to support development activity, and Clark said the work is currently under budget.

Van Nieuwenhuyse said the company expects continuing news flow from drill results at Lucky Shot and Kitsault, as well as infrastructure updates from Johnson Tract, in the coming weeks.

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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