In This Article:
Release Date: March 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Contango Ore Inc (CTGO) exceeded its production guidance by over 25% in 2024, producing nearly 42,000 ounces of gold.
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The company successfully reduced its debt from $60 million at the start of 2024 to approximately $38 million as of the earnings call.
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Contango Ore Inc (CTGO) plans to be debt-free and hedge-free by mid-2027, with significant debt repayments scheduled for 2025 and 2026.
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The company has a strategic plan to focus on permitting and infrastructure development for its Johnson Tract project, which aligns with its direct shipping ore model.
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Contango Ore Inc (CTGO) reported positive operating cash flow for 2024, with plans to use excess cash to pay down debt and deliver hedges.
Negative Points
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The company's cash costs slightly exceeded guidance, coming in at $1,209 per ounce for 2024.
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Contango Ore Inc (CTGO) experienced a $20 million realized loss on derivative contracts in 2024.
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The company has a significant hedge book, with 86,000 ounces of gold hedged as of the end of 2024, which could limit upside potential from rising gold prices.
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Exploration results from the 2024 Manhou exploration program were not significant, indicating limited immediate expansion potential.
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The timeline for the preliminary economic assessment (PEA) for the Johnson Tract project has been delayed, with completion now expected in April.
Q & A Highlights
Q: What factors led Contango Ore Inc to exceed its production guidance by over 25% in 2024? A: Rick van Neenheiser, President and CEO, explained that the company had a full year of transporting ore and started mining in July 2023. More ore was delivered to the stockpile at Fort Knox than anticipated, and higher-grade ore was processed, resulting in about 10,000 ounces more production than planned.
Q: What is the cash flow projection for 2025 and beyond? A: Mike Clark, CFO, stated that the cash flow from operations in 2024 was positive, and for 2025 and 2026, the free cash flow will primarily be used to pay down debt and deliver hedges, with a goal to be debt-free and hedge-free by the end of 2026.
Q: Is the hedge coming off once the debt is paid off? A: Mike Clark confirmed that the hedge delivery schedule mirrors the principal repayment schedule, with both maturing in June 2027. The company plans to cut the hedge deliveries in half by the end of 2025.
Q: What are the economic advantages of direct shipping ore versus a classic mill setup? A: Rick van Neenheiser highlighted that direct shipping ore has a smaller environmental footprint, avoids the need for building a mill and tailings facility, and significantly reduces capital costs and permitting timelines.