Manh Choh Ore Production Yields 55,000 Ounces of Gold

Since the July 8 pouring of the first bar of gold, the Kinross Alaska mill recovered approximately 55,000 ounces of gold and 11,000 oz of silver from ore shipped from Manh Choh, a mine being operated under the Peak joint venture between Kinross Gold Corp. (70%) and Contango ORE Inc. (30%).

For Contango, this marks the first revenue generated under its “hybrid royalty” model, a unique strategy to directly ship ore from high-quality gold, silver, and copper deposits to existing mills for processing. This unique business model substantially lowers the capital costs, environmental footprint, and permitting risks associated with developing mines at deposits that are much higher grade than the industry average but may not have the size to support their own mill.

The high-grade ore from Manh Choh is trucked roughly 250 miles to the mill at Kinross’ Fort Knox Mine north of Fairbanks, Alaska, where it is processed in batches.

The first batch of Manh Choh ore, which was processed from early July through early August, delivered $32.2 million worth of gold and silver to Contango.

“Having exceeded Contango’s internal production expectations from the first batch, we can now look forward to two more batches planned in the Fall for the remainder of 2024,” said Contango ORE President and CEO Rick Van Nieuwenhuyse.

Manh Choh delivers gold, revenue

Over a roughly one-month period, the Kinross Alaska mill at Fort Knox processed 190,040 metric tons of Manh Choh ore averaging 9.46 grams per metric ton gold. With the reconfigured mill recovering 95% of the gold from oxidized ores, approximately 55,000 oz of gold and 11,000 oz of silver were produced during this initial batch.

Contango’s 30% share of this production comes to roughly 16,500 oz of gold and 3,300 oz of silver. Out of this, approximately 8,900 oz of gold were delivered into the company’s hedges at an average price of $2,025/oz and 5,800 oz were sold at an average price of $2,440/oz.

In addition, Alaska’s newest gold-producing company received 3,128 oz of silver, which was sold for an average price of $27.58/oz. The balance of the gold and silver remains in recoverable inventory at Fort Knox and will be included during the processing of the second batch of Manh Choh ore later this year.

In total, Contango received $32.2 million from selling its share of gold and silver produced from the first batch of Manh Choh ore.

“I would like to acknowledge and thank Kinross, and in particular both the Manh Choh and Fort Knox teams, for achieving this important milestone,” said Van Nieuwenhuyse.

Kinross Gold Corp.

Contango ORE CEO Rick Van Nieuwenhuyse hefts the first 600-ounce gold bar poured from Manh Choh ore above his head.

With two more batches of ore scheduled to be processed before the end of the year, Contango expects to receive a total of 30,000 and 40,000 oz of gold from Manh Choh in 2024.

“Assuming we can meet these production targets, and the price of gold remains at current levels, the company expects to be in a strong cash position by the end of the year after funding working capital and delivering into our hedges,” Van Nieuwenhuyse added. “We then look forward to executing on our ‘Hybrid Royalty’ model focusing on our Lucky Shot and Johnson Tract properties, which we believe can both be developed efficiently by using our DSO (Direct Shipping Ore) approach.”

Contango’s net earnings from Manh Choh will come into clearer focus after the costs have been tallied.

“Mining and transportation of ore mined at Manh Choh continues to be delivered to the stockpile at Fort Knox and at this stage we believe all-in-sustaining-costs remain in line with the feasibility study,” Van Nieuwenhuyse added. “In late October 2024, the company expects to receive the Peak JV financial results for the quarter ended September 30, 2024, which we will report and discuss in our earnings for the quarter when we announce in the first half of November.”