Contango Announces S-K 1300 Technical Report Summary with Robust Economics

0:04 Good morning, good afternoon, good evening, depending on where in the world you're signing in from. Certainly a lot of time zones on today's call, so I do appreciate you joining us. I'm on today with Contango Order to talk about the recent publishing of a technical report summary on the Johnson Track project with some pretty attractive economics. So I've got on today CEO Rick Van Nuenhuysen and CFO Mike Clark. Gentlemen, how are you today? Doing well. Romeo, I'm in Cornwall, England on a geo field trip. And the hotel has terrible internet. So we have our Starlink out front. So if the internet goes haywire, we can blame Elon Musk. That was my plan, so that's perfect. Awesome, so here's how today's gonna work just for the folks in the room. After my brief housekeeping here at the beginning, I'm gonna throw it to Rick and Mike for a brief presentation, then I've got some questions for them. But after that, this is totally an interactive event. So please use the chat in the bottom right of the screen.

0:54 If we don't get to your question today, for whatever reason, running out of time, et cetera, I'll make sure the Contango team gets them and they'll get back to you as soon as possible. We'll hope to get to as many as we can today. I'll say this event is also being recorded, should be available right in your inbox by the end of the day Eastern Time, and from there you can share it out as much as you'd like. It'll also be available on Six's YouTube channel and Six.com. Without further ado though, I'll throw it to Rick and Mike for a presentation. Yeah, thanks, Romeo. We've got a few slides to go through here, just really focusing today on the Johnson Track project. Hopefully you saw the press release announcing the

1:34 initial assessment, which is American for Canadian PEA. It's the same thing. If you go ahead, we're obviously making forward-looking statements here. And I think the next slide is on Moncho, of course, in production. We are on track to produce about 60,000oz of Gold this year. I think next week we'll have a press release out on our Q1 results and Mike will probably have another event like this to talk about those results. But today we're here to talk about Johnson Track and on the initial assessment that was released just yesterday, I guess. So next slide is focusing in on Johnson Track, of course, located in lower Cook Inlet down, right, not too far from the coast. And that's one of the things that's attractive about this project.

2:38 As you know, Contango is focused on our direct shipping or model, which means we'd like to focus on projects that are close to existing infrastructure. And in Alaska, that means road, rail and water. And like our Moncho project, which is next to the highway, the Alaska highway, that means we can direct ship our high grade ore running between 7 and 8 grams to the mill at Fort Knox. Our Johnson track project is located about 20 miles from the water, so it's a good fit. As you can see, it's very good grade. And we have the, as the study has shown, it's got a very attractive, very robust project with a $225 million NPV and 30% IRR.

3:28 So let's let's dive into it a bit more. The land, one of the other criteria is we've talked about for our DSO model to work quickly, get mining projects into production quickly is the land ownership. The land here is owned by Cook Inn at Regional Incorporated, also known as Ciri, one of the more successful of the Alaska Native corporations. They had the right to select lands. They allowed Lake Clark National Park to exist because that was their traditional land. They allowed the settlement with the federal government was to allow the park to exist, but to allow the Johnson Track Project area and the land to be deeded to Siri for mineral rights.

4:18 And as along with easements to the coast and in a landing a port site or a bars loading site. So the next slide shows the easements, The purple outlines are the 2 tracks of land that are a patented land owned by Ciri. And then the white dash lines are the access easements that have been issued. And then in the darker outlines there that shows the potential port sites. We're doing more studies this year to determine the exact road alignment and also the exact location of the port site there on Tuxedne Channel. Next slide, just to get you oriented here, our camp in the foreground there, and then the Johnson track deposit is located between those 2 mountains. And you can see they're very steep mountains In between the camp and the portal site there with the white triangle is the access road to connect the camp and the portal site.

5:28 And this is again, all in this recent initial study that we've, initial assessment study that we've just published. The road there has been permitted, and we're now in the process of permitting the proposed tunnel portal site at the portal site there. The deposit Johnson track is located between the 2 big mountains there. Again, very steep. And the way to, certainly the way to develop this project is to put a tunnel in and get underneath it. And first step, next step is really to get underneath and drill this out to a feasibility level. The next slide shows this in a sort of a 3D projection here. The multi-color blocks, those are the resource model, block model for the resource.

6:19 Based on the existing drilling from surface, and as I said, it is difficult to drill from surface. And you see where the proposed tunnel comes in right at the base of what is the known deposit. It's open at depth, it's open along strike, it's just that we can't drill very easily from the surface based on the geometry of the steep mountains and the geometry and dip of the ore body. On the right there you can see where the proposed tunnel is. It's basically about a kilometer and a half long tunnel, which is a similar length to our Lucky Shot Tunnel. So this is, you know, we're not trying to build a huge long 10 kilometer tunnel like that. This is pretty basic stuff. As you can see, the plan then would be to get the tunnel built and do the infill drilling to outline the ore body. And that really is the next main step from an exploration standpoint to get the ore body drill to a density, drill density that will allow us to complete a feasibility study, which is effectively just a mine plan, because again, we do not plan to build a mill or a tailings facility or a large power, you know, a fixed power plant to run all that.

7:37 We'll have a mobile power plant and basically be a very small footprint underground mine only with the ore loaded in metal boxes that carry about 25 tons of ore per box, and then that would be transported by road down to the barge loading site, the ore would be loaded on a barge and then sent to a milling facility. Next slide, if you will, Romeo shows the ore body and the overall general mine plan. I'll point out, you can see where the ore body is there on the left. The red is our foot wall fault and it separates ore from waste material.

8:24 And you can see we refer to this as the day site fault. It's in the hanging wall of the ore body, but the foot wall to our workings. And we've taken this approach to develop the mine by putting all the workings, all the development workings, in the hanging wall to the bay site fault. And the reason for that is that's an unmineralized post mineral intrusion. So it has no sulfides in it. It's not going to generate

9:00 acid. It's not going to result in any metal leaching because you're not generating any acid. So it's a smart development plan. And basically, the way you're going to mine this is starting at the bottom and then mining upwards. If the ore body continues, obviously we'd have to ramp down, but all of our development rock and development work will be in that post-mineral day site that is, that again, has no sulfides and then therefore no potential for acid rock drainage and or metal leaching. You can see the economics here. They're very robust. This is mostly a gold and silver mine with significant amount of copper and zinc as byproduct.

9:50 We tend to focus on the post tax NPV 5 numbers, 225 million dollar NPV with about a 30 percent IRR over a 7 year mine life. On average, you're producing about little over 100,000 ounces of gold equivalent, gold equivalent ounces, at an average gold equivalent grade of 7.8, 7.58 grams per ton. Now that's a diluted mine grade, so that takes into account your stope development and dilution. As you'll notice, the resource grade is 9.4, but your mine grade is 7.58. So You're basically diluting the ore as a result of the mining method that you're using.

10:38 Obviously, more infill drilling as we get underground and when we do stope development, we may obviously be able to improve that. But right now, with an indicated inferred model, the resulting mine plan is, results in that roughly 2 gram dilution to the resource grade. You see the initial capital costs here are about $214 million. And that's, I'll take some broad numbers here. It's roughly $15 million to put the infrastructure in place, which is the tunnel, get the feasibility level drilling in place. It would also include the access road up to the portal site. In the initial capital costs include about $36 million of contingency, I think that's about 25%, and then your sustaining costs, which is continuing the development of your different ramp levels as you mine from the bottom upwards towards the crown pillar at the top there, which is $61M and that includes a $12M contingency.

11:49 Our all-in sustaining costs are a really healthy $860 per gold equivalent ounce. And obviously you're taking a credit then for the copper, the zinc and the silver that you're producing as co-products in the overall mine plan. What I really love about this project and the approach is the payback period is not much over a year. So, very, very significant economic metric in terms of, you know, putting in the $200 million of capital, you're getting paid back in just a little over a year. So That's a quality of a high quality project, or a consequence of a high quality project.

12:35 You can see the gold price sensitivity. We've chosen $2,200 as the base case. That's about where consensus is. Obviously the gold price has been moving up pretty dramatically in the last year. So consensus also has been moving up, but obviously it lags a bit the spot price by about $1,000.

12:58 And So we wanted to make sure that investors understood what the leverage to gold is here with regards to an NPV calculus. And they can see the NPV at $3,000 gold is $400 million and at $4,000 gold is $600 million. So it's a very robust project. And of course, what you always want to protect for is what's the downside look like? And you can go all the way down to $1,800. And this still has, I think, about $140 million NPV. So it's a solid project, a modest amount of capital, initial capital to develop, a modest amount of sustaining capital because you're letting gravity do most of the work here. You're mining, starting at the bottom and mining up, which also obviously results in pretty good operating costs.

13:53 I think the next slide gets into that with a couple of views of the ore body. You can see the kilometer half access tunnel there. And then basically you're losing a series of spiral ramps starting at the bottom and then mining up

14:11 as you mine the ore body from the bottom to the top. The level plan layout there on the right side shows the internal spiral ramp and then your development access over to the fault, which is the dayside fault is shown in purple there. And then your mine sequencing you're using for the most part, and shown in green, is long hole stopes. And so these are, as an underground mining method, is a pretty cheap way to mine underground. These are, you have long, long stopes that you're mining. And right up next to the fault in orange is the cut and fill. That's obviously more expensive mining than the long haul.

14:59 But I don't remember exact percentages, but more than 90% plus of the ore body is mined with using long-haul methods and Clearly the ore body as you was shown in the previous slide or a couple of slides back that ore bodies open at depth So once we get in and Romain maybe just back the slides up to that block model, you can see that, you know, the ore body has been drilled to a depth there. And that's obviously where we put the tunnel in. We've done that purposely and we want to be able to drill further down along the plunge of the ore body and then we really can't test the the width of the ore body from the from the surface either because just because of the geometry so we'll be able to see if it's if it extends along a long strike as well.

15:51 Let's go ahead and go up a couple of slides then and I is that the last slide? I think that is the last slide. So I'll stop there. There's a lot of statistics to talk about. And we're really pleased with the study. I think it's

16:15 a realistic plan. And I think we're discounting this project over a 5 year period. We're gonna try to work hard to see if we can get it done a little sooner than that. But I think that's a realistic timeframe. And certainly from an independent study, we're pleased with discounting the net present value over a five-year period. So I'll stop there, Romeo, and we'll open up for questions. I'm sure there will be quite a few. Awesome. Yeah, there's a good number in the chat already, but I've got my own first. So appreciate your patience folks in the chat. I won't be long, just wanted to get through a couple myself. I will ask, so I don't usually see a payback period this short of 1.1 years undiscounted. So I'm curious how in your experience and perspective, how does JohnsonTrack compare to other mining projects in the sector and what do you think contributed most to achieving those numbers?

17:08 Yeah, I mean basically it gets down to grade and the long-haul, being able to use long-haul stoping as the the principal mining method for an underground mine. It's obviously fairly selective because it is an underground mine, but you get sort of bulk, more of a bulk approach to mining. There are some parts of the ore body that we may even look at sub-level caving, which is an even more less expensive mining method and or room and pillar. So those are other things you need more geotechnical information to really make those kind of those level of decisions. So we've kind of, you know, in the initial assessment here, we've just done a, you know, what you would typically use for your typical underground mine, where you have thick mining widths. Remember, the average width of this mine is 40, of this mineralized body is 40 meters.

18:02 So that makes, you know, for good long hole stoves. Now, so it's grade is the most important thing. And then next is the thickness of the ore body. I will point out just a couple of things on that one-year payback. I want to make sure investors understand how this is derived. It's based on when you start production. Now, because it's an underground mine, you actually start mining almost 2 years ahead of that. So we call it minus, year minus 2, you're starting your underground development work. And then year minus 1, you're doing your test mining and you're ramping up mining ore and delivering it to site. So year minus 1, we're actually producing ore.

18:50 And if we can move, you know, assuming that the rest of the infrastructure is in place in terms of the road access road down to the barge site facility, then you can transport the ore to a mill. So that's it. I just want to make sure it's, you know, we're spending money, you know, well before we start actually mining ore. So that is, that's just how that works for an underground mine. It's a little different than an open pit. I think that's helpful context for folks in the room. Now, I know gold is going to contribute approximately 70% of this project's revenue. And I know I saw the slide, the project's got

19:28 really strong sensitivity to gold prices. So I'm curious, you're using 2200 as the base case. What price range do you believe is realistic over the next 3 to 5 years? And how is this impacting your development timeline? Well, it's a, Gold's been on a complete tear here. So it's, I mean, there's all sorts of, you know, 4 or $5,000 predictions. I mean, I think Goldman Sachs has a $4,000 target. I think it's by the end of the year, I think, or maybe it was a one-year target, something like that. So, you know, we didn't want to publish an initial assessment that was out of date

20:02 the day it was written. So I'll tell you, it's a bit difficult. So we convinced our QPs to go up to 4,000 just because gold's already between 3,000 and 3,500. And So, I mean, obviously we'll make a lot more money if gold prices are higher, but it's also the other metals that contribute as well. So I think we've chosen what I would call conservative long-term pricing that's based on consensus. And, you know, the consensus numbers are a whole bunch of different banks that say here's what we think the metal prices are going to be and it's just an average. I think CIDC is the one who has done that traditionally over the years and it's kind of become the guidebook, if you will.

20:51 Now at higher gold price, do things happen faster? No, you still have to do all the work and there's a fair bit of work to do. And just to kind of go through it, the next steps we're doing is to permit the underground tunnel. That's a state of, that's a mine operating permit. It is a mine. So technically we have to meet all the criteria of a mining operation. So that's the permitting is the next step. Then once it's permitted, we build the tunnel access and then we just drill the heck out of this thing. It takes a lot of drilling to define an underground resource. It's probably somewhere between 10 and 15,000 meters of drilling. Those 2 things cost rough numbers, about $50 million.

21:37 But that is included in the capital costs that are in there. So the $214 million of capital, roughly 50 million of that, is getting the underground built. Now, at that point, it's just you're doing exploration. So from, you know, Mike's gonna tell me I have to write that off, cause it's exploration.

21:57 But the tunnel is gonna be used for, you know, the main access point to remove the ore when we're ready to mine and develop the project. So in rough numbers, that's going to be $50 million off of the initial capital because it's basically already a sunk cost at that point. I don't know if Mike, you want to say anything else about accounting? No, no. I think you said most of it there. I don't think I have anything to add. I got one. So I know that base case of 2200 gold with that 224.5, 30.2% IRR, it's obviously compelling. I'm curious, and this reflects a question that's in the chat. Can you share just capital allocation strategy between Johnson Tract and other exploration assets in your portfolio?

22:42 How does it compete, basically?

22:44 Yeah, I mean, geez, if we had all the money in the world, we'd be doing more, but we don't. And so I will say our, our, what continues to be our main focus is paying down the debt and delivering into the hedges. Once we get rid of the hedges, we're generating somewhere in the neighborhood of $100 million of free cash flow a year with Moncho. So that's gotta be the first order of business, frankly. Now, what do we need to do? We need to permit Johnson Track. That's permitting is not expensive. I mean, I don't wanna downpay that, you know, how much in terms of, you know, $200 million capital to build a project, spending $3 million or so on permitting is money well spent, and, but you can't do the rest of the work until you did the permitting. So that is the next step at Johnson Track.

23:42 We'd love to get a drill program going at Lucky Shot this year, and we're making an assessment of whether we feel comfortable doing that, but we haven't made that decision yet. So I'd say from a capital allocation standpoint, we're gonna pay down debt and deliver in the hedges and continue to permit the Johnson Track project. We love

24:11 the Gold price to go up and Copper price to go up. That's all good stuff, but it doesn't make things happen faster. No fair enough. To add to that, Romeo, our debt is now as of today down to $30 million with the ING and Macquarie and our hedge balances just below 75,000 ounces from 124,600 at July of last year. So we're making progress and we're targeting trying to get all that kind of paid off by the end of next year. Awesome. Actually, Mike, I've got another one for you. The ASIC listed on the deck, strikes was very low at 860lbs. So just for me and everybody in the room, if you could remind us how that's calculated and kind of what's included. It's basically all your OPEX and your sustaining CAPEX. The OPEX is your mining, and then you're trucking down to the barge site, and then you're barging down to the mill site, and then trucking from the barge to the new mill, and then the milling costs and then the GNA. So those costs are all in there and those are roughly split about 50% for mining, 25% of that is for milling, and then the other 25% is GNA and then the transportation.

25:16 In addition to that, you have your sustaining capital. And so you have those amounts in there. Now, the number here that they have, you know, everyone does their ASIC a little bit differently, but the ASIC they have here, we have 860. The way we typically account for them on show is we would also include royalties and mining production taxes. So if we actually added those in that might add about another $100 to it. But yeah, it's still well below a thousand bucks. And that's how we would account for it in our financials going forward.

25:42 Appreciate that helpful context for sure. One question I had is how long is that ramp up period expected to take? I know you kind of got into this already, Rick, but I think it's worthwhile to reiterate before declaring commercial production. Is there pre-production that period? Does that include that $213 million? Just give us a bit of reiteration there. Yeah, so just, you know, so basically we take the five-year discounting window, you know, the first 3 years are exploration, and then year minus, and I'm counting backwards, so 543, year minus 2 you're putting your development work in So again, you're mining but you're you're not producing any or you're just putting all your development work in again in the In the unmineralized a site then year minus 1. You're actually producing some ore and it's not a full year.

26:37 So that's why it's, I mean, that's why it's, we have a 7 year mine life because you're producing gold in year minus 1, year 0 being the start of production, the declaration of commercial production.

26:52 But year minus 1, you're actually producing more. Year minus 2, you're actually mining, you're just not making any money, you're spending money. So that once you start commercial production And you know, it's a bit of a thumbs up from here. So it's an estimated time but that that first year of mining stope mining Is is your rent what I would call your ramp up year. And then you're saying, OK, I'm going to do 6 months of ramp up, and now I'm going to declare commercial production. And that basically is an accounting decision. And Mike can maybe give us more detail on that. Yeah, the one comment I'd add to that is that's when the ASIC calculation comes into play. It's once you make that production decision. It's not the sunken capital before that.

27:43 Great. One thing I know you went over it already, so don't need a long answer here, but why is that average grade change to 7.6 grams per ton from that 9.4 in the resource?

27:54 Yeah, so that's a good question. So when you do a resource block model, You're kind of a tight frame around where the drilling will allow you to predict grade or estimate grade. When you go to a mining block, and the long-haul stoping is a cheaper method of mining, but it's less selective. And so you get more dilution than say compared to say cut and fill. If we went to

28:30 sub-level caving as an example, you'd have even more dilution, but your mining costs are going to go down significantly. So it's a trade-off between tons and grade, and obviously it's an economic decision as to whether you do cut and fill, whether you do long haul, whether you do something like a sub-level caving. So I think, once we get more geotechnical work and we get underground and really see how the rock behaves from a mining sense, we'll make some decisions whether we stick with long hole, or whether we look at something like sub-volatile caving. And it may not apply to the whole or body, it may only apply to parts of it. But those are kind of details that you need to get with getting underground and really looking at the rock face to face, so to speak.

29:21 All of this work, of course, is based on drilling to date, which is pretty typical of how you approach these projects. But once we get underground, we'll be in the ore body once we drift over to it. So then we'll have a really good feel for that. But that is basically the answer. It's basically just mine dilution. Makes sense. One thing I want to talk about is a bizarre bear case for gold. Because I know you said the project still has a 140 NPV at 1800 gold. So I don't think we're ever going to see that number again. But I'm curious if we do have a period of sustained lower commodity prices what operational adjustments could you implement at Johnson Direct. Yes. So I mean actually one of the if you go to the recommendation sections one of the things in the recommendations is to look at ore sorting and so I think actually regardless of whether we wouldn't necessarily wait until the gold price went down to look at that but we're gonna look at ore sorting because ore sorting basically is a modern method that used to do by hand which is these are rocks I like and these are rocks I don't like and you literally used to hand sort them.

30:32 We can do that with ore sorters now at an incredibly fast speed.

30:39 So it is something we'll take a look at and what the ore sorting is basically separating out based on a whole, there's a whole variety of sensors that you can use to sort ore. But depending on the on the character of the ore, you can you know, decide if you want more, more sulfide or less sulfide. And if that's carrying that's what's carrying the gold and you can sort pretty effectively. So and what that does is it gives you, there are sort of 2 pluses if you make ore sorting work for you. 1, you're reducing the amount of material that needs to be transported. So you're saving dollars on your transportation costs. And then obviously if you're upgrading your ore through the ore sorting, the head grade at the mill you're processing your at is gonna be higher. So your cost per ton at the mill would be lower. So it is something we're definitely going to look at.

31:37 But again, as you point out, it's a robust project all the way down to $1,800 gold. And so this thing will generate a lot of cash flow. I appreciate that. One thing, and this reflects a question that's in the chat. Jan van Worsel congratulates you on your PA. But he asked, how are you going to fund the CapEx? So what I'd add is, are we looking at equity, debt, and are you planning to hedge this time around? I'll let Mike talk about hedges. But so it'll probably be a combination of equity and debt. And let me be precise about equity. So if we go through the timeline here, the next 2 to 3 years, we'll be permitting and be setting ourselves up to go underground. When we go underground, that's when we start spending the big dollars.

32:28 And at that time, we'll be unhedged at Moncho and we'll be, we'll have paid back all the debt. So we'll be generating a hundred million dollars of free cash flow a year. Now we don't wanna spend all our money at Johnson Tract. So we might also look at entering into a debt facility to finance, I'll just throw out a number here, half of it. And so self-finance half of it and debt finance a portion of it. Now the difference to address the hedging question, I'll let Mike weigh in on this as well.

33:09 When we started Moncho, we were a junior company, junior explorer that had no background, no lending history and not making any money. So what bank would loan to you, the only banks that would loan to you are banks that will want to make sure that they're going to get their money back when they make a hedge. And so that's why the hedges are in place.

33:35 Now we're a money making operation. And again, once we pay the hedges, deliver into the hedges and pay the debt off for generating a substantial amount of cashflow that the banks can look at and go, okay, well, we'll loan you $100 million because you're making $100 million a year. Mike? Yeah, hedge is kind of a 5 letter word I'm not a big fan of these days.

34:00 I'll never say never. I guess you could always do a better hedging program and use collars or something if you needed to. But I guess I wouldn't want to be forced into it by lenders. But if the price was right and you came up with a good program, then yeah, nothing's off the table, but not something we're actively exploring now. It's kind of early days. Appreciate it. One thing I know you talked about during the presentation is that the underground exploration at Johnson Trek. I'm curious what you think the upside could be there. I'm going to throw out kind of a crazy number, but is a doubling of the resource possible? Is that something you see as potential? Yeah, I don't know, Romy, if you can go back to the slide deck and just show that block model again, but, And I'll just speak while you're doing that, but yeah, the bottom and the along stripe portion of this ore body is completely open because we just physically can't drill it from the surface.

34:59 It's up along the fault, the day site fault there, but the bottom's open and the sides are open. In fact there are a few other lenses that have been intersected adjacent to the main, you know, what's the, you know, the main JT Johnson track ore body there. So yeah, there's lots of upside. I don't and you can see the thing I'll point out is on this slide the The yellow blocks are 3 grams, which is roughly the cutoff grade In the pink and purple blocks, you know, they're up 15, 25 gram per ton. So, you know, that's close to an ounce per ton rock. And it's, and it's completely open at depth. And so we just need to get underground and drill all this, this, this fan shot of holes that we have represented here to really understand how much more ore there's going to be and how deep it's going to go.

35:55 The next thing I'll say is, you know, the style of mineralization here is it's a breccia and it's a polymetallic breccia so it's copper, zinc, gold and silver. This type of mineralization is related to a porphyry system and so it's not above us, it's below us. We know that from the Alteration pattern at the surface that there were very high level here in in the in this porphyry system So once we get underground we can then we get that silly mountain out of the way We can drill deep holes from the underground and see you see what else is down there. So it's a very exciting exploration target It is difficult to drill because of the terrain, but once we get underground, I think we're gonna be, I think we'll have an easy shot at increasing the size of the ore body.

36:46 And obviously we may find something substantially larger if we can tap into the port of resource here. Great. A couple of questions already covered, which is great. One thing, and I just want this reiterated, why did the expected mine life go from 10 to 7 years? Yeah, good question too. So, and I'm gonna speculate a bit here that, we've said we have a million ounce gold deposit and we would expect it to process this at 100,000 ounces a year. So, you know, 100,000 divided by a million, 10 equals 10. So a couple of things here. So when you, I mentioned earlier that we're actually mining ore in year minus 1. So it's really 8 or, you know, 7 and a half.

37:34 The other, The other reason is you don't mine the entire ore body here. It's you're only mining the parts of the ore that are better drilled and that you can substantiate where the grade is. And so you're definitely, and that's where the upside is. And then once we get underground, we're gonna do all those drill holes that you saw on the previous slide there. And I'm very confident we're going to get back to that million, you know, million ounces. And I think we'll probably easily exceed that. I've already gone through ore sorting, but I will ask the transportation logistics for Johnson Track, they involve barging and trucking to that offsite processing facility. Curious if you could run us through the tolling cost assumptions that you make.

38:24 Yeah, so the assumption is a 25% premium on the milling costs. So, and this is, and we talked with SRK about this, and this is a bit of an industry standard. I won't disclose what we're specifically, what we're paying with regards to Moncho and the Kinross Fort Knox Mill, because that's really under confidentiality. But I can say that this is a more conservative assumption than that. So I think it is a reasonable assumption for an initial assessment level assessment or you know study and obviously we're one of the other things we're looking at is okay where are we going to process this or I'd say we're looking at 5 different opportunities and they range from, we've had some discussions of groups that say, well, we'll just send this stuff over to Asia and put it on a seagoing barge and send it to Asia.

39:33 That's not something that we actually came up with. It was something that we were approached with. And I'm not sure I wanna, depending on where that is in Asia, I'm not sure, I definitely want Contango to be in the middle of that. But if there's an international metal training company that likes that idea, we might just, you know, sell it to them and let them deal with it. The more traditional thing is to, you know, look at existing mills and there's, as I said, there's 4 other options for us to take a look at. We're having discussions with 4 other groups. And once you're on the water, you have a fair bit of mobility and barge costs are relatively inexpensive compared to say trucking. And in the case of Montchaux, we know what those metrics are pretty well because of all the trucking we're doing with that project and we know that barging is is simpler.

40:27 And maybe just to cover it off you'll notice in the in the study that we're placing the ore into metal boxes, and then these contain about 25 tons of ore. That would be trucked down to the barge site, loaded on the barge, and you just load these. The reason we like this approach is you just load these boxes with a forklift. It's a big forklift, but to lift 25 tons, but it does make for fairly easy logistics. And then the same when you're unloading it and then when you get to the mill, you're just basically rotating the forklift rotates and it just dumps it into a hopper. So fairly simple from a logistic standpoint.

41:17 It's not like you're doing stockpiles and things. And we don't like the stockpile because you run into losing material and then dust control and lots of other things that people worry about contaminants. So putting it in the sealed boxes just kind of eliminates all that concern. That makes sense. One thing, just for folks who don't know, there was a 25% contingency applied to capital costs. I'm curious for your perspective, what areas of the project do you think have the greatest potential for optimizing as you progress towards production? Yeah, that's a tough one. Transportation will obviously really be dependent on fuel costs. So that's a big one just to keep an eye on. And I think, you know, underground mining costs are mostly related to employment and to wages.

42:11 So a significant amount of the capital is mine development. And so I think it's about half, right? It's close to half of the overall initial capital. And it's almost all of the sustaining capital. So yeah, labor costs are probably the other real one to kind of keep an eye on. Great, I appreciate that. One quick question, I just have to ask as a Canadian, and I think other Canadians might be curious. Why is this framed as a independent assessment, not a PEA? It was actually news to me that there was a new term called initial assessment. And so I learned something doing this because I always called them preliminary economic assessments.

42:57 And so I'm trying to beat it into my brain to remember to call it an initial assessment. They're the same thing. You know, SK-1300 is, you know, not exactly as it expects things between the United States and Canada. It's not exactly a carbon copy, but it's pretty close. But there are a few differences and one of the differences is in under 43 101 you have 45 days to file your your Document I'll just call it Under SK 1300 you only have what was that 4 or 5 days Mike for 4 business days from We're we're getting after it Now appreciate that and there's one question last one of mine, but it mirrors 1 in the chat. So we'll take this as me going to the chat formally.

43:45 And that's with that, the environmental considerations and closure costs of 30 million. How are you approaching permitting and community engagement generally, just to ensure that this goes off timely? Yeah, so, community engagement, first of all, It's sort of early and often is the philosophy we like to use. Yeah, and one of the reasons, or I shouldn't say one of the reasons, but now we have an initial assessment document that kind of shows here's what the plan is. You know, we wanna be able to talk with the communities. And I sort of break them into largely 2 communities. We have our partner is Cook Inlet Regional Inc., Siri. It's an Alaska Native corporation. They own the land. They have the rights to mine the land and so, you know, they're our business partner in this and it's an Alaska Native corporation and their shareholders are Alaska Native and So they're sort of a, I'll call them a special class of stakeholder.

44:52 And so for community engagement, we work through Siri with our community engagement with Siri shareholders. And There's a number of villages around Cook Inlet. Obviously a lot of Ciri shareholders live in Anchorage, but they, in fact I was just in their office the other day and they showed me a map of where the Ciri shareholders live and they live all in the United States. And a lot of them obviously live in Alaska too. So, there will be have a lot of engagement through Siri and with in partnership with Siri, with the shareholders of Siri. And then secondly, and not just separately, I guess I should say engagement with the other communities all around Cook Inlet. So Homer, Nekiski, Kenai, Seldatna, Those are communities that are adjacent on the other side of Cook Inlet, if you will.

45:52 There's a few more traditional villages, Ciri shareholder villages on the west side. And as I said, we'll be engaging with them through Siri. And so, you know, again, now that we have a study and, you know, plans that we can show people and say, this is the plan, we've got more work to do and here's the work that we plan to do. We'll be doing a lot of community engagement with both Alaska Native series shareholders and other stakeholders in the region. Great. B. Minex from the chat asked, what's the plan on the tunnel? Will it be mine-sized or will future enlargement be required? And what are the relative costs of the full-scale approach versus smaller? Yeah, it's a good question and your best to, especially when you know you've got an ore body, if we were a little more suspect on whether we have an ore body, we might just do a smaller exploration tunnel. But this will be a full-size tunnel. I think it's 4 by 5 meters if I remember correctly.

46:57 Dan from the chat asked I know we already touched on it but always worth reiterating Has an existing mill for the ore been identified somewhere near tide water? Yes, yeah Can't say because I'm under CAA Saco sorry folks in the chat. We've been through or sorting We've been through some ESG at J. Murray asks how thick is the fault? Like what's the competency of the day site fault? Yeah, so good technical question. It varies. It varies from very thin to like less than a meter to up to I think 5 meters is how wide it is. So it's, and it's an aquaclue. So that's an important thing from a water management side. So an aquaclue is a barrier to water. So it's just another reason why we put our infrastructure or our development work in, in the day site, on mineralized day site, in the hanging wall to the fault because you don't have to worry about any of that water being contaminated because the fault itself is an aqua fluke.

48:03 And obviously that's something we'll be taking a hard look at when we do the feasibility study mine plan is how we're going to mine this and keep the water separate. So that definitely will be, I'm sure there'll be a lot of hydrology work being done on that just to, so we can manage that. We know the water quality of the ore body is going to have, you know, it's mineralized, so it's going to have, and it does, you can go on the surface and see it's oxidizing, and obviously, it's, mother nature is metal leaching now. That's how we find these things. They're anomalous, metals on the surface. So, but that'll be an important part of managing the project so it'll definitely be a focus of further studies.

48:57 Great. Somebody in the chat asked if the silver and copper byproducts are large enough to attract the interest of streaming financing? I say yes, but I'm not a fan. Just like Mike's not a fan of hedging, I'm not a fan of streaming. I'm not a fan of either. Mike's going on both ends. I've been on the wrong side of this twice. There you go. I just say also don't think there'll be any necessity. I mean, you know, the Streaming companies have been very successful at financing because the equity markets have been really tough. So again, now that we're generating cash flow, it puts us in a little bit different league. And as Mike said, never say never, but as we see the world right now and the gold price where it is.

49:49 And so we think, I think a traditional debt financing would be the way we would go here. I guess I will caveat the streaming deals are a lot better than the original ones that were out there. And so there's better better terms and they aren't necessarily life of life of mine. So I guess I will say never. I won't say never. But I can tell by the frowns. Wesley from the chat talking to a company strategy. He notes Contango looks like it's going to use Moncho to pay for the development of Johnson and Lucky. He says both of them are shorter lived mines based on current reserve size. So he's curious what the strategic plan is for long term value at Contango. Basically what's the deep future plan? Well it really is exploration and you know we're doing exploration at Moncho.

50:36 So I'll be very surprised if we just mined the feasibility plan at Moncho. I think we'll at least get a few more years out of it. Lucky shot, we only have 100,000 ounce resource or 110,000 ounce resource there, but we know we have a lot of drilling to do. That is a permitted mine site. And we just need to do the drilling. As I mentioned earlier, we'd love to do the drilling this year. We just want to make sure that we've got the financial horsepower to pay the debt off and deliver in the hedges before we make that commitment. And then, we were just talking about the exploration upside at Johnson Track, which I think is just excellent. I mean, it's just, you know, some of the deeper drill holes that we've drilled there, deeper meaning at the bottom of that minimalization that we've identified to date, are in some of the best grade material that's been drilled. So now that we're gonna put a tunnel right in the guts of that, I'll be very surprised if it just ends magically right there. So it is about exploration.

51:45 I'd also say, we're looking at other opportunities. We like the idea of not being a single asset mine, producing mine. So obviously, why we're to have our development plan, but, you know, looking at other opportunities where we can continue to expand, In particular, opportunities that might lend themselves to the DSO model and or an existing operation that would lend itself to being the hub of a DSO model. So hub and spoke approach, which is pretty frequently used in Australia, but not as prevalent here in North America. So that may be something that we look at more Specifically and look and see if that hub-and-spoke we can make that hub-and-spoke work for contango as we grow the company Great 1 question was right at the top of the hour that I wanted to save for after the Johnson track specific content I've asked if there's any plans to monetize or explore the other assets acquired from high gold We didn't acquire any other assets from High Gold.

52:54 They had already spun off the Ontario assets in Onyx. So yeah, There were no other assets that came with the high-gold acquisition. We do own a chunk of Onyx though, so that is going well for us. Great. Yeah, it looks like a pretty good project from an exploration standpoint. There you go. I'm a happy shareholder. There's one question from Jan, and I only bring up the bridge once per webinar these days. But he asks, when will the man show Bridge Killer be finally behind us? So again, the Biden administration didn't approve the Alaska Department of Transportation budget plan and budget.

53:41 And so that's what precipitated the reductions in the bridgeway restrictions. The Trump administration approved the plan. And so now there is a plan to fix the bridge that was causing the issues for us next year. So It's not something we see as a fix from the bridge rate restriction standpoint this year, but next year. Awesome, thank you. I know it is getting into evening in England, so I won't keep you too much longer, but I will leave it to you. It's Guinness O'clock. I do want to throw it to you for what you're most excited about coming up next at Contango. Well, yeah, so next week, I think Mike's going to release our Q1 results. I'm excited to get those out.

54:27 I think we're, as you saw in our reverse campaign of this year, we produced 30% more gold. And so it'll be exciting for us to tell everybody how much we spent producing that gold. And then I think the week after we start the next campaign for the May campaign. So it's nice when we see an operation that's just doing well and really kind of ahead of schedule by producing more gold in Q1. And so that's exciting and making money is exciting, paying off the debt is exciting, delivering into the hedges is exciting. And you know, look, this initial assessment on Johnson track demonstrate this is a really viable project.

55:19 I think in a year's time, we've added a lot of value for Contango shareholders and hopefully the high goal shareholders who stuck with the project and stuck with Contango are rewarded by the fact that we were starting to demonstrate the value of this high quality asset. And I'm really excited about that, but I would also like to get the jewels turning at Lucky shot. So I'm just I think we're in a good spot and gold prices, I think is going to keep marching forward. I don't know if people saw the Fed announcement, not the not the song and dance that Joe and Paul did for for yesterday, I guess it was, and keeping holding rates steady.

56:08 But behind the scenes, they started quantitative easing again. And they, was it $25 billion of bonds that they had to buy because the rest of the market wasn't buying them. So when QE comes back, GoldPrice does well. So if we keep doing QE, it doesn't matter what the interest rates are. You're printing money again and that's inflationary. So gold price will respond accordingly. That makes sense. I certainly see the money printers getting geared up. You can hear their humming just starting. But Rick, Mike, thank you guys so much. This was a great presentation. Thanks for going through the grilling with the questions. Folks in the chat. Oh, sorry, go for it, Mike. One comment. Our annual meeting is on June 10th. Proxy materials went out last week. I just want to remind people to vote their shares, please.

56:57 Vote your shares. Thank you. Good note to end on. Folks in the chat, thanks so much. I know there were a million questions. I think I got through all of them. But I will send the transcript to the Contango team in case we missed 1. Thank you, everyone, so much. And I hope everybody has a great afternoon.