Contango Silver & Gold: Four Projects, One Growing Development Pipeline

Trevor Hall (0:18)

Alright, the merger recently with Contango Ore and Dolly Varden, which now is Contango Silver & Gold, that was big news a couple of months ago, and I think this is our first interview, I believe, since that announcement of the merger was made. The company did produce an updated mineral resource estimate for the Kitsault Valley Project this morning, so more on that. In fact, we're not even going to talk to Rick, we're not going to talk to Sean. We're going to talk to the CFO, where he knows where all the bodies are. Mr. Mike Clark, hey Mike, good to see you.

Mike Clark (0:49)

You as well, thanks for having me.

Trevor Hall (0:50)

Yeah, good to have you on. Listen, before we kind of jump into the numbers, give us a sense of the last number of months. Does it feel like the machine is turning in the direction the way you would like it after that merger?

Mike Clark (1:03)

Yeah, I know the merger has gone extremely well. We have three projects on the go. We have all of our teams working at each of the sites. They're all ahead of schedule, under budget, and we've kind of executed on everything we wanted, whether it be at Lucky Shot, underground drilling and development, as well as surface exploration.

At Johnson Tract, we've completed the road from the camp to the portal site, which included some pretty sizeable bridges, as well as advanced permitting. And then at Kitsault, we started with a 40,000-meter program that's going to get over 50,000 meters, and it's gone extremely well. And the assays so far have shown that.

Trevor Hall (1:40)

Yeah, okay. The cash flow for Manchow, it seems like it's on track. Any sort of surprises there?

Mike Clark (1:46)

No, no surprises.

It's the lower year of the production for Manchow as we transition from the North Pit to the South Pit. So, you know, our guidance this year was 40,000 to 45,000 ounces of gold. We still expect to hit that. The costs are slightly on the higher side, but what that really does is set the stage for next year where our production goes to 75,000 to 80,000 ounces as we're fully under the South Pit, and our costs get cut in half. So, a lot more free cash flow will come out next year.

Trevor Hall (2:12)

Okay, very good. Lucky Shot, you had some really nice expiration hits recently. About two and a half meters of 86 grams per ton of gold. In there was 0.8 meters of 244 grams per ton. So, obviously incredible grades there.

At those holes, is the continuity now, is the grade more important than the continuity?

Mike Clark (2:32)

Well, I think the most important thing is that's a new discovery. That's a new vein we weren't aware of. And so, that's what we found. And we think just that little portion alone represents about 50,000 ounces of gold. And it's right near where we'll begin production. So, that was a nice to have, a nice to find. And we continue to learn more about the deposit as we continue to drill. And it is very encouraging to our team. And we're confident that we're going to have a new updated resource out next year. And we're still targeting a four to 500,000 ounce resource. And then from that, we'll develop a mine plan, which we expect to have completed next year as well.

Trevor Hall (3:07)

Does this seem like Lucky Shot's getting a little bit more complex than originally anticipated because of it?

Mike Clark (3:12)

I wouldn't say complex. We've just got a better understanding of it. We've just gotten the various vein systems and how things all connect. And so it's gone very well.

Trevor Hall (3:20)

You're doing some underground work, right? Underground drilling?

Mike Clark (3:22)

Yep.

Trevor Hall (3:23)

How's that going?

Mike Clark (3:24)

The underground drilling has gone very well. And we're also continuing to drive the decline or the ramps. We're continuing to advance that.

When we finish that section, then we go to the drilling. And all that is going very well on time, on budget. There's still a number of assays to come, and they'll be coming out through early next year.

Trevor Hall (3:42)

Okay.

I did mention that updated Mineral Resource Assessment that was published actually this morning for the Kitsault Valley Project. Indicated resources did increase 93% to 89.5 million silver equivalent ounces. Mike, let's break this down. How much of that increase was through pure exploration, and how much of it was just a metal price factor?

Mike Clark (4:03)

Well, this MRE was really based on the last, you know, 433,000 meters of drilling. That was prior to us acquiring them. So this was consulting all that, updating it. And so what we've, you know, the drilling this year is not included in that. So this was just bringing it more into the indicated category and how to be inferred and giving us much more confidence on the deposits itself.