Contango ORE - Update on Feb 2026 Financing

0:03 Good morning, good afternoon or good evening, depending on where in the world you're signing in from today. I've got with me today Contango Ores CEO Rick Van Duyneiza and CFO Mike Clark to discuss the company's recently closed financing. Mike, Rick, how are you today? Good. Good to see you again, Romeo. Awesome. So here's how today's going to work, just for the folks in the room. I've got some questions just based on the recent release, just to give a bit of clarity for everybody that's here. This is an interactive event, so there's that chat button in the bottom of the screen. Like always, We welcome your questions throughout the event. Probably going to be about a half hour today, so if you'd like to get your question in earlier, it's probably more likely to get covered. If for whatever reason I don't get to your question, we just run out of time, it's totally off topic, it's a bit of a repeat, I'll still make sure the transcript gets to the team, and they can get back to any of the ones that were missed following the event.

0:49 Last piece of housekeeping, this event is being recorded and will be available for replay before the end of the day today, so probably close to 5 p.m. Eastern. It'll pop right in your inbox, but we'll also be on Six's YouTube channel. Okay, Boring stuff done. Rick, you just announced a US$50M raise. The bulk of the proceeds going towards buying back Gold hedge contracts. I'd love if you could walk us through the thinking here. What made now the right time to start knocking off those hedges?

1:13 Obviously, Gold has been very volatile in the last year. We have been talking about this for quite a while and we didn't want to look like idiots and buy it. It went up to US$6,000 or US$7,000 and lock it in there. We like the trading range that it's in. If you ask why right now specifically, I'd say one of the motivating factors was there was a conveyor belt fire at Fort Knox. And now it doesn't have any effect on our production. And so that's good news for us. But it was a bit of a wake-up call. Hey, operations have risk still. I mean, there's lots of risk in the mining business, but it doesn't stop when you're producing Gold. There's still operational risk. And we said, well, you know, geez, if this event had resulted in us not having to shut down operations for 3 or 6-months, and It didn't, but if it did, that would be a problem because we'd have to go buy Gold at US$5,000 or US$6,000.

2:25 That's why we think that's the right thing to do. It de-risks the company from an operational standpoint of having to go buy Gold if for some reason operations get interrupted. Now, again, fortunately that didn't happen this time. Ken Ross folks, you know, literally put out the fire and made arrangements to have some mobile crushers put in place so that we can easily process the Montreal ore. That's all going according to plan. I won't be surprised if costs are going to be a little higher as a result of that, but that will come out. We'll understand that a little bit further down the road. We've talked about taking out the hedges for a while.

3:11 We all know it's what's holding the stock back a bit. But this US$50M financing with 2 existing shareholders who believe in Gold and believe in our business model, so very supportive, we think it's the right group of people to do this kind of a financing with.

3:32 And it will set the stage for us to completely unwind the hedges, I think by the middle of the year. Mike might have a more specific answer, but in generalities, that's the objective. Great. Mike, I do have a question for you and it's reflected in the chat. Somebody came right out of the gate asking, clarify how many hedges will be removed and what will be left. So with $45M from this going towards the buyback, how much of the hedge book does this take out? Yes. So we're taking out roughly 15,000oz of hedges and that'll be the next 15,000oz of hedge contracts that we have. So March, June and into September. What that'll leave for the end of this year is there's still 11,000oz hedged this year for 2026 and then another 15 in the first half of 2027. So Our roughly 42,000oz of hedges today is reduced by $15,000 and then we'll be down to 26,000oz to 27,000oz that

4:31 we can deliver into with this year's production. And to Rick's point, the idea is to fully deliver into them this year and be debt-free and hedge-free by the end of the year. And I'll just add that the debt position with the landers is US$14.6M right now. That is going to be paid down by another US$4M this year, and there's US$10M remaining at the end of the first half of 2027. I'll just pipe in here that we will continue to work with our bankers. That's where we deliver the hedges to. There are some alternatives there that we'll be pursuing to, again, we want to get unhedged as quickly as possible. And because we do believe in the upside in the Gold price and we want exposure to that. So that is the plan. And this US$50M basically sets that plan

5:19 underway. It Gets it moving. That makes sense. Mike, I know a lot of people wanted to know, just reaching out, what the impact on cashflow, margins, et cetera is going to be. So when's the guidance for 2026 coming out? Yeah, we're targeting having guidance out in mid-March when we put out our annual financials. So I estimate about March 15th and we should have full guidance out for this year. Awesome. One more, and I know I asked you this last time I did a raise, Mike, but people, I think, seem curious. So I will ask again, for investors who aren't familiar with the structure, what are the pre-funded warrants that were part of this raise? And why do you choose to include that component?

5:58 Yeah, we didn't really choose to incorporate it, but it was one of the investors wanted to use it. It's commonly used in the States. It's not a warrant, but it's really a fully funded warrant. It doesn't have voting rights. And so at a point in the future when it gets converted, they just become normal shares. But apparently they're just non-voting. I look at it as an equity grant and we got the $50 million and there's 1.6 million shares and 325,000 pre-funded warrants. It's really 1.9 million shares. If you're exercising a warrant for a penny, you're pretty sure that's going to happen, right? They don't have to. They'd be silly not to or we'd be down a penny. But yeah, it'll get exercised. While we're on numbers, actually, how many shares are issued with the current financing with and without PFW. And then just give us a recap of what's the total post-merger with Dolly Vardon?

6:52 So I'll take that and then Mike, correct me if I make any mistakes, but I'll do it in kind of round numbers, not to get too many decimals in there. But It's a little over 1.9M shares were issued with this current financing. And that again includes, you know, that's assuming all the warrants are exercised. So that brings our current total up to about 17.7M shares. And then when we merged with Dolly, the ratio was set, so that doesn't change. And again, I'm going to use a round number here. We were a little over 15M shares at the time of the merger, and that's where the ratio was set, the 0.1652. So In total, it's a little over 15M shares. In total, we'll have 33M shares outstanding with post-merger and when we're trading as Contango Silver and Gold, both in the US and Canada TSX under the symbol CTGO.

7:55 In addition, we still have about 680,000 warrants. Roughly half of those are priced at $26M, and the other half at $30M. Great. Sorry, I was just helping somebody with their audio issues in the chat. The one thing I wanted to ask is, I know the raise was placed with those same 2 institutional investors, like you said, believe in Gold, believe in your business model.

8:20 It's still a pretty concentrated book for a US$50M deal. What does that tell you and the audience here today about appetite for Contango Story right now? And did the conversations with them Give you any read on how the market's viewing the company right now. Yes. I think, as we said before, what was holding the company share price back was the fact that we had these hedges in place largely, and a lot of our, we're producing the Gold, but we're only getting US$2,000, a little over US$2,000 for that Gold, and yet Gold is trading at US$5,000. This gives us exposure to the upside in the Gold price. And we do fundamentally believe in the Gold price. And so obviously we're taking a little bit of a bet here that the Gold price eventually is going to go higher. We would consider it a nice consolidation stage around US$5,000 now.

9:13 So if we guess wrong and Gold goes down to US$4,000 or US$3,000, That's why Mike's paid the big bucks as CFO. He's put the puts in place so that we protect that downside. That's the most important thing for a junior producer, is protecting the downside. If we make more money because we bet right, nobody's going to worry about that. But if we bet wrong and Gold goes back to US$2,000, we'd still be making money because our costs last year were US$1625 and they're probably going to be a little higher this year, but we're still making money. But if Gold went to US$2,000, I'm going to really thank Mike and he's probably going to want a big bonus for putting those puts in there at US$4,000.

10:02 It's just managing the business. We don't have 10 other operations to rely on delivering Gold from. I think it's just prudent business management. And obviously our 2 big shareholders share the view that Gold is going up. You don't invest in a Gold mining company, you'd think Gold prices are going down. So,

10:27 like you say, it's just good business. And they like the fact, they like our business model. They like the fact that we have this growth plan, a 5-year growth plan to produce 200,000oz of Gold and 5 or 6 million ounces of Silver with adding the Dolly Varden asset. So I think this just makes us a very strong company. Great. And Mike, while we're on that topic, actually, I'll get you in on the $700,000 for gold put contracts for downside protection too. Just curious for your take on the piece. Obviously, like Rick just said, it looks like you want more spot exposure on upside with some prudence still, But how are you getting your bonus with this one? Yeah, we got to stop talking about that. I refer to it more as a price protection policy or plan.

11:12 It's really insurance. And so the idea is, we're buying out 15,000oz of hedges. I'm literally going to buy puts to match what we're taking out to go at the same the same 3 quarters of of hedge deliveries. And we just we're just buying those to protect us if it goes below $4,000. It's a small insurance cost when you think about what we're paying. And

11:36 we just didn't want to have any more exposure beyond that kind of $1,000 spread. Great. Makes sense. I want to zoom out a bit for kind of big picture, Rick. So I'll throw this to you. I know between Moncho, the Alaska development properties and the proposed merger with Daly Varden, lots going on. Now the balance sheet's in a different position post-raise. You've got more Gold selling at market prices. What are your broad priorities for the next, we'll call it 12 months. It really doesn't change. And I think we've been signalling that we're going to find the right time to do a transaction that can allow us to get hedge-free at least for this year, and then we'll work on next year. So It's basically the same plan. We're currently drilling at Lucky Shot now.

12:22 And that program is, the drilling will take place throughout the year, probably a little bit into early next year. And then with all that drill information, we'll do a feasibility study mine plan and transportation plan. We'll have a conversation with Fort Knox and see if it makes sense to go up there. Or maybe we're, as I mentioned before, we're looking at the opportunity to buy or carve out some room in another mill to process the ores from Lucky Shot. Similar thing at Johnson Track. This year, we plan to get our permits for the tunnel, to build the tunnel. Those are permits that are issued by the state of Alaska. We expect to have those well in place in probably Q2 of this year.

13:14 I think Some of the permits might actually come in by the end of Q1, but certainly by the end of Q2, we'll have all those in place. We'll build the road connecting the camp to the portal site and we'll get all the equipment mobilized in to start building the tunnel. But we won't get started on building the tunnel this year. First thing we need to do is also winterize camp so we can work year round. So that just sets us up. Meanwhile, of course, we're in the FAST 41 permitting track for permitting the federal permits that we need to build a road between the mine site and the barge landing site on the coast. So those permits are for road construction and for a barge landing facility. The US Army Corps of engineers is the lead federal agency.

14:03 Working well with them, we've had, I think we've had like on our third or fourth meeting now with the FAST-41, we have meetings every other week to keep everybody on the same page in terms of us submitting reports and submitting information for the issuance of permits as we go through the whole process. We expect that process to take about 2 years. So by the middle of 2028, we'd have all the permits we need for mining and for constructing the access road and port facility at the Barge Lane facility at the coast. And then that brings us up to Kitsault, which we're basically planning now. The First step there is completing a mineral resource estimate on the Kitsal assets.

14:51 There are 5 main deposits there, Homestake, Homestake Silver, Wolfvane, Torbritt and Dolly Varden mines.

15:05 That will incorporate about 200,000m of drilling that has been done since the last mineral resource estimate was updated, I think about 4 or 5 years ago. Lots of work going on. We've already been having meetings with the Dolly Barton team and blending our teams and we're looking for office space and all those sort of administrative things as well. So we're definitely planning for this to happen. We still have the shareholder vote to take place on the 17th, with the closing being roughly a week later. I think it's the 26th is what it's scheduled for. And zoom out even further, because I know there's a few hundred people in the room looking at the list. There's some investors who seem brand new to the Contango story. Some that are Delivardian shareholders that are learning about the story. Really what I'd love you could do is just frame the opportunity for people in the room. What's the pitch for the combined Contango-Deli burden from here?

16:07 Yes. So on a combined basis, you've got roughly US$800M to US$1Bn market cap company, New York Stock Exchange listed, TSX listed. We'll have well over US$100M of cash in the bank. The US will be generating well over US$100M of free cash flow at today's metal prices. Then we've got 4 high-quality districts to explore in. The Monchaux district, because that's all private land. Remember, that's a big land package. It's all private land. We're doing about US$5M of exploration work there. Lucky Shot is a whole district we control. Johnson Track is a whole district we control. And the Kitsault Valley project is a big area of the, it's the Southern part of the Golden Triangle. It's a big piece of, it's own little triangle inside the Golden Triangle. So

17:01 lots of exploration upside in those districts. So we have a five-year plan basically to advance our projects that all fit the DSO, the direct shipping ore model, high-grade, near infrastructure, and relatively easy to permit the mine sites. In the case of Kitsault, the Torbett mine was a historically producing mine. It's a brownfield site. There's a road to it. That growth profile will get us to 200,000oz of Gold and 5 or 6Moz of Silver. That is very similar to Hekla. So if you want an investment into a safe jurisdiction, North American jurisdiction, precious metals, Gold, Silver, and with

17:54 a continued growth profile based on the fact that we've got these 4 exploration districts to continue to explore. We think that's, you know, it does, that company looks like Hecla. And so we think that's a great investment opportunity for investors because Hecla is a US$15B market cap company. And this combined merge company, Contango Silver and Gold, will be roughly a US$1B market cap company. So we're staged for solid growth, safe jurisdiction. Great, appreciate that outline. One question that came in online in advance, before I get to the questions in chat, Somebody wanted to know, can the management explain the logic of raising 50 million now instead of opting for a call option when they took the loan?

18:40 Great question. And the short answer is that option wasn't available what 3, 4 years ago when we put this in place. We had a very, very different market. You remember we had a market, Gold was trading at US$1,800, US$1,900 and everybody thought it was going to go trade at US$1,200. The major companies were using US$1,400 to define reserves. And in fact, that's the Montreal Reserves, because that's the guidance that Kinross was using, was $1,400. So bankers are going to be more conservative than mining companies when loaning companies to mining companies. So that was the world we live in. So you got to do things in the world you live in, not the one you want to live in.

19:27 That's probably classic lifetime advice. So there you go. There's one question from Jan in the chat. Is there a hold period for the institutions?

19:36 No, these are free trading shares. Great. Thank you. There's one question and there's a couple of variations of it from the same person, which is really why choose to do this now and not 6 months ago, for example. Well now, I think you explained that a little bit. 6 months ago, we talked about doing it and every time we talked about doing it, the damn Gold price would go up 1000 dollars. We felt like we were chasing ourselves a little bit there. And now just seemed like a good time. And again, we had a bit of a wake-up call with the conveyor belt fire at Fort Knox, again, which didn't affect production, but something else could happen that would affect.

20:25 Getting unhedged is the right decision for the company.

20:30 If the right set of circumstances had existed 6 months ago, we would have pulled the trigger, but they didn't, at least in our estimation. Hindsight is always great, but when you're living it day to day, Mike and I talked a lot about this and of course we had a lot of discussions with our board.

20:51 I guess one of the things I'll say with regards to timing is, we've got 2 really solid shareholders here who again, support the company, believe in the company, believe in the Gold price. And that's really important. When we announced this, you didn't see the Gold price get whacked. These are good, solid shareholders. And not all shareholders are good, solid shareholders. I think that's another thing is developing the relationships with our shareholders gives us confidence that this is an accretive transaction. And I'll just add to that, Rick, when 6 months ago or 5 months ago, we did raise money, but the shareholders weren't interested in use of proceeds going to buying out hedges. They were interested in adding, you know, putting money into Lucky Shot and to Johnson Track. And so that's what was there. And we just couldn't get the type of numbers we needed and at the right dilution levels and the right stock price to pull the trigger at that time.

21:52 I appreciate that. It's always hindsight. People always want to know what you could have done, what you would have done. I would appreciate it. One person in the chat, Rock, thanks for joining us, asked Dolly Varden recently had very good assay results. I was wondering if a by-product of the raise is that there will be more money broadly for moving Dolly's projects forward?

22:15 We've got about a CAD$30M program planned for the Kit Kitsald assets this year. Where specifically we're going to be drilling will really depend on the mineral resource estimate. But in broad categories, There'll be more infill with the mine to start looking at which is the first asset in the Kitsil Valley to start thinking about developing a mine. Is it Torbrid? Is it Homestake? Is it Wolf?

22:45 The mineral resource estimate will help guide that. There'll be a lot of drilling that will be in-fill, preparing to say, we're going to start focusing on Corbett as an example, or Homestead. These are all open, so there'll be an element of further expansion drilling at any and all of those deposits. And then we still have a huge land package that is completely underexplored. We're well aware of our neighbours who have continued to find new veins and new targets in these terrains that are just recently unglaciated because the glaciers have been receding. So there's lots of exploration potential on this significant block of land that comes with the Dhali Vardhan asset purses. So, yes, we've got lots to do.

23:43 But the short answer is the US$30M program is a pretty healthy program. Awesome. One question, obviously you can't give an exact number for this, so really just your personal opinion. Beyond from the chat wants to know, what are the chances of the Daly-Varden deal going through or not going through? Yeah. I'm not even sure if I'm supposed to comment on that, but I can just repeat that we have voting share agreements with 22% and verbal commitments that about another 30% or the total of 30%, 35% I think it was, had verbally told us they support the transaction. These are all large, chunky shareholders. So, I'm confident. I think it's a merger that makes sense. I think it is truly a creative.

24:33 And I think most of the feedback we've heard has been very, very positive from both Dolly and Contango shareholders. Awesome. Great. Thank you. I love a political answer. I think that is the most you're allowed to say. So great stuff. Somebody from the chat does want to very explicitly talk about politics. They want to know if you anticipate any impact from the midterms on permitting in Alaska.

24:57 0. The fact is that we do need permitting reform and there's been a lot of talk about permitting reform. There's a couple of, there's a speed act that's being discussed in the house.

25:11 I'm not aware of a parallel bill in the Senate yet, but there's discussion of that. So short answer, the midterm elections will have a 0 effect on permitting. Permitting reform needs to take place to have an effect on a meaningful effect on permitting. Certainly, we still have a favorable administration in the Trump administration in terms of their recognition of the importance of metals and critical metals specifically, of which our Johnson track and

25:39 soon to be Kitsil assets fit very much in that critical metal space. Silver is a critical metal, gold is a critical metal, Copper is a critical metal. You can argue whether Gold is a critical metal or not, but on some lists it is, on some lists it's not. But the bottom line is, after the election, we still have 2 years of the Trump administration. Fast 41, I will point out, doesn't mean fast. It's Fixing America's Surface Transportation Act. That's what the acronym stood for. We think it's kind of a crummy acronym because it gives people an impression that things happen fast. They don't, they just put it on a dashboard so everybody actually knows what's going on and who's to blame if things aren't moving along according to plan.

26:31 That includes the company. We have times when we have to have our applications in and our information gathered so that it can be reviewed for issuing specific permits. So, but it does hold the agencies accountable as well. So FAS 41 was passed under the Obama administration. It's not a Trump invention. It's been around for years. So yeah, that's, I don't know, that's a long-winded answer, I guess, but we need permitting reform. And so any chance I get, I'll get on my soap box and talk about it a little bit. No, hey, this is what the soap box is for us. Why you got your time? Somebody asked, is there gonna be a campaign update soon? And is there 1 going on right now?

27:17 Yes, there is a campaign and we'll update that. I think, Mike, we're going to just wrap that into the year-end financials, right? No, I think next week we'll give an update on starting the campaign and FAST-41 stuff on JT. Next week we'll have an update to the market. And then just a little further out, we are drilling at Lucky Shot and at the right time we'll put out results on that as well. That drill program is actually going along pretty smoothly. Great. Awesome. Somebody from the chat just says, very exciting stuff. Keep on going. So that is where I'll close off today because I said it'd be a half hour and I'm so rarely honest with you guys about how long we'll be. So we'll close it off for today. Rick, Mike, thank you so much for going through the details of this and answering people's questions about the financing. Thanks, everybody, who joined. I know there are quite a few of you in the room, so thank you for behaving. I'll always say when there's more than 200. I hope everybody has a wonderful end of their day.