Categories: Precious Metals
Topics: General Precious Metals / Gold Stocks

Contango Silver & Gold (TSX: CTGO)(NYSE American: CTGO) President Shawn Khunkhun on Production at Manh Choh, Advancing Lucky Shot, and Building Toward a Production Profile of 5 Million Ounces of Annual Silver Production and 200,000 Ounces of Gold

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president of Contango Silver & Gold (TSX: CTGO)(NYSE American: CTGO) — Mr. Shawn Khunkhun. Shawn, it’s great to have you on. It’s been a bit. How are you today, sir?

Shawn Khunkhun: I am doing very well. It’s very nice to be on and to be talking to you.

Gerardo Del Real: Well, listen, I think your timing is exceptional. We have a gold price that is sitting right at that $4,600/oz mark. We have a silver price sitting at $68/oz. Both look like they want to head significantly higher. We’ve got fiscal and monetary policy that supports that. We have geopolitical turbulence all around the world that supports that.

And so I can’t think of a better time to have you on to talk to us about Contango Silver & Gold. And frankly, I can’t think of a better time to have the kind of asset base that you have in the jurisdictions that you have moving forward.

For those not familiar with the Contango story, can you give us an overview of the company? And then we can dig into what the rest of the year looks like because I think you’ll likely agree that it’s going to be an exciting end to this year.

Shawn Khunkhun: Yes, absolutely. In terms of Contango Silver & Gold, we trade on the NYSE American and TSX under CTGO. The way I would describe the company is we’re an emerging North American high-grade, mid-tier silver and gold producer. And we have the Manh Choh mine in production.

So we’ve got a mine that’s a high-grade, open-pit gold mine. It’s 8 grams per tonne, open-pit gold. And we’re running about 60,000 ounces a year in annual production over the life of mine. And so at these prices, that’s generating a lot of free cash flow. 

Over the life of mine, the all-in sustaining cost is about $1,700. So with $4,700 gold and a $1,700 AISC, that’s a tremendous amount of free cash flow. Our guidance is $100 million of free cash flow because we use $3,700 in our budget.

But if you do the math on that, that’s closer to $180 million of free cash flow using spot gold. So we’ve got the Manh Choh mine in production. And Manh Choh is going to have a really big year next year. 80,000 ounces is our guidance, and our cash cost guidance is $1,200. So it’s a big production year next year, and it’s a low-cost year. And if we plug in spot gold, that gives you a number of about $260 million of free cash flow using spot gold.

Now, our market cap, Gerardo, is only $650 million for a company that could generate $250 million of free cash flow. So from a cash-flow-multiple perspective, it’s a really interesting business to look at. But that’s not the most compelling part of the story. The most compelling part of the story is the development pipeline.

And I’ll start with Lucky Shot, which, similar to Manh Choh, is a high-grade gold mine in Alaska. It’s over 10 grams per tonne in the current resource estimate. And what we’re doing at Lucky Shot — where it’s a past producer, our permits are in place, we’re underground, we’re drilling, we’re developing — our goal is to put out a Feasibility Study in 2027 and to start producing again in 2028.

So our goal in 2028 is to have both Manh Choh and Lucky Shot producing and to go from a 60,000-ounce-a-year producer to a 100,000-ounce-a-year producer. And again, being conservative and using $3,700 gold, a company that’ll be generating $200 million of free cash flow.

And again, that’s not the most exciting part of the business. Those are two mines that we’re using the free cash flow from. And when I talk about Contango, I use the term “self-funded,” okay? We’re a company that only has 33 million shares issued and outstanding, half of which are in very, very strong hands — management, cornerstone investors, and institutions like Franklin Templeton, Fidelity, Eric Sprott, etc. So we only have 15 million shares in the float.

But the reason I use the term “self-funded” is because of the cash flow currently from Manh Choh and the future cash flow from Lucky Shot. We’re using those funds, and we’re developing our two projects that I think are going to demonstrate themselves to be Tier 1 assets: the Kitsault Valley, which is the old Dolly Varden project, which currently has 65 million ounces of silver and a million ounces of gold; and the Johnson Tract project, which is a high-grade gold project in Alaska. Currently, the resource estimate is 1 million ounces at almost 10 grams per tonne.

The company has four projects: one producing, one soon to be producing, and two projects that are in the development pipeline that, within four years, are going to give us a production profile of 5 million ounces of annual silver production and 200,000 ounces of gold. 

With that type of production profile, looking around the market, the comparables out there are $5 billion, $6 billion, or $7 billion market-cap companies.

Gerardo Del Real: There’s a big difference and a lot of runway between the current market cap and a $5 billion, $6 billion, or $7 billion valuation. How important is it that these assets are in top-notch jurisdictions, given the geopolitical turbulence that we see basically everywhere?

Shawn Khunkhun: Well, listen, I live in BC, born and raised. I’ve spent a lot of time up in the Kitsault Valley in the Golden Triangle where some really incredible things are happening on our property but also outside of our property with companies like Skeena, Newmont, etc.

I recently was up in Alaska. And you land in Anchorage, which is a wonderful city, and within two hours, you’re at Lucky Shot. Paved roads, and you’ve got a workforce there that wants the project. And so it’s safe, it’s secure, and it’s got a long-established mining history and track record. I think it’s one of the top 10 global jurisdictions for mining.

I always say, why do investors go to gold and silver? In addition to the monetary history, the fact that they’ve been money for 5,000 years, currently, in this moment where governments are printing money and we’re in the state of the world that we’re in geopolitically, where do you want that safety, that security, that hedge against systemic risk? You want it in a Tier-1, safe jurisdiction.

I don’t want my gold in the jungles of some obscure land that may or may not allow me to go there. Having our assets in Canada and in the USA, I think, is the biggest differentiator.

Gerardo Del Real: I couldn’t agree with you more. You answered the questions I had in regard to catalysts, production profile, peer comps, upside on valuation, and jurisdiction. So, per usual, Shawn, always a pleasure chatting with you.

Where can people get in touch with you and the Contango team? And I know that you’re going to be out on the conference circuit, as you typically are. So where can people find you? Where can people see you?

Shawn Khunkhun: They can come to the Contango website. They can track us on social media. They can call us at 907-388-7770 or email us at info@contangoore.com.

And the reason you want to start following, you want to sign up for the newsletter, and you want to start following the company is we’ve got a new MRE coming at Kitsault Valley. We’ve got lots of drill results. We’re going to do about 70,000 meters of drilling in 2026, so that’s going to generate a tremendous amount of results. And just continued big catalysts.

And so it’s time to look at the company. I think we’re extremely undervalued, and I just appreciate the opportunity to come on and share the value proposition.

Gerardo Del Real: Shawn, always a pleasure. I think it’s going to be an extremely fun several months and, frankly, next several years — at least on the precious metals side. You’re positioned perfectly for it. Thank you so much.

Shawn Khunkhun: Thank you, Gerardo.

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