HOUSTON--(BUSINESS WIRE)--Contango ORE, Inc. (“Contango,” “CORE” or the “Company”) (NYSE American: CTGO) announced that a major milestone has been achieved at the Company’s 30% owned Manh Choh gold project. Kinross Gold Corporation, the owner of KG Mining (Alaska), LLC, which is the 70% owner, operator and manager of the Peak Gold LLC joint venture (JV) and Manh Choh, announced the results of the Feasibility Study (FS) for the Manh Choh project ahead of schedule. They also announced that the Kinross Board made a decision to proceed with development of the project. The FS outlines a plan to batch process the high grade approximately 8g/t Manh Choh ore through Kinross' Fort Knox mill. By utilizing the existing facilities at Fort Knox, the FS plan contemplates that the Manh Choh project will proceed without having to permit, capitalize and construct a mill or tailings facilities at the project site. Kinross also contemplates reduced environmental disturbance and lower overall Green House Gas (GHG) emissions.
Based on Kinross' updated resource model, Contango would have an initial reserve of approximately 300,000 ounces gold at 7.88g/t, and over half a million ounces of silver grading 13.6g/t, net its 30% ownership of the Peak Gold JV. According to Kinross' release, aggregate capital expenditures for the joint venture to execute the development plan will be approximately $182 million, including $30 million for the purchase the highway ore transport fleet, resulting in approximately $54.5 million in capital contributions attributable to Contango’s 30% interest. Average All-in Sustaining Costs (AISC) are estimated by Kinross at $900 per Au eq. oz. (which includes the Fort Knox Toll processing costs), which would result in a margin of over an $800 per ounce at today's approximate $1700 gold price. Kinross disclosed that the Manh Choh operations are expected to produce on average 225,000 ounces of gold per year, which would approximately 67,500 ounces net to Contango on an annual basis.
The early works program has begun at the project, with camp refurbishments, earthworks and road construction now underway. Kinross, on behalf of the Peak Gold JV, is also continuing its comprehensive community programs and prioritizing local economic benefits as it develops the project. Permitting activities are advancing, with major permits submitted in December 2021 and regulatory reviews well underway. Kinross believes that production is expected to commence at Manh Choh in the second half of 2024, with a mine plan that consists of two small, open pits that will be mined concurrently over 4.5 years.
An extension of the community support agreement was signed earlier this year and demonstrates strong support from the Native Village of Tetlin, on whose land the project is located. Manh Choh is expected to generate 400 to 600 new jobs, economic benefits to the State of Alaska, local employment and opportunities for local suppliers, in addition to a significant royalty to the Tetlin tribe.
Contango continues its commitment to advance our other exploration projects in Alaska – including our Lucky Shot project with underground development and exploration drilling now underway to explore the down dip extension of the Lucky Shot vein structure.
Mr. Rick Van Nieuwenhuyse, the Company’s President and CEO said, “We are very excited to achieve this important milestone for the Company and its shareholders. Board member, Curt Freeman and Board Chairman, Brad Juneau discovered this orebody nearly ten years ago through hard work and by applying solid exploration principles. They worked closely with the Tetlin tribe to develop a strong working relationship which Kinross continues today. Based on All-in Sustaining Costs estimated by Kinross at $900 per Au eq. ounce, the Company should generate strong cashflows. To see construction activities start at Manh Choh is truly an accomplishment.”
Since the Peak Gold JV is proposing to use the Fort Knox facilities to process the Manh Choh ore, the Company’s economics are different from those in Kinross' Feasibility Study. We are in the process of completing an SK 1300 Technical Report on the Feasibility Study appropriate for our 30% non-operating interest. The Company expects to have this report completed and filed next month, and looks forward to sharing the detailed results with our investors.
For more context, please join CEO Rick Van Nieuwenhuyse in a live event on July 28th at 12pm EST/9am PST. Q&A will follow a brief presentation. Click here to register: https://my.6ix.com/lZIAolNm
To listen to Kinross’ conference call and audio webcast regarding their Q2 results, including a discussion on the Manh Choh project, please refer to this link: https://event.on24.com/wcc/r/3825874/C32EEC268FD07C5A815CB5CFD6FD1B77
To view the Kinross press release on their Q2 results and discussion of the Manh Choh project, please refer to this link: https://www.kinross.com/news-and-investors/news-releases/press-release-details/2022/Kinross-reports-2022-second-quarter-results/default.aspx
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