Contango Silver & Gold Inc. 2026 Q2 Earnings Call

Good morning, Bianca. Good to see you again.

Good morning. And you too, Mike.

Yeah, obviously adding the Dolly Varden asset, it really is a world-class asset, and I think that's why we were eager to get the transaction completed. The teams are integrated. We'll talk more about the drilling later, but we've got 5 rigs turning at Kitsault. There's a lot of other activity going on in the company at Lucky Shot and at Johnson Tract. I think, frankly, the most exciting news for me is we're out from underneath the hedges. We've got a clear exposure for our shareholders to the upside in the gold price, which I think, it shot up over 5,500, went back to 4,000, seemed to find a floor at 4,000, and that's when the team said, "Okay, now's the time to take care of the hedges." I think that was the right call.

We've seen gold price continue to move up and we're seeing now we're getting the advantage of that. I think from the macro side, which we can talk about later, but I think the company's in a great position. We're generating strong cash flows. We've got the better half of this year ahead of us with production from Manh Choh. We always guided that the first half was going to be lower and higher cost. Of course, we're set up well for 2027 when we'll have probably the best year at Manh Choh with high grades, good grades, and low cost. Yeah, I think I'm really pleased with where we are as a company. We still only have 33 million shares outstanding. I think we're all pretty proud of that.

Yeah. Thanks, Bianca. Yeah. Rick already kind of alluded to the grade being lower in the North Pit, especially as we mined out outside of the resource model, there were some more grade ounces that we did pick up before backfilling. This year or the second half of the year, we're fully into the South Pit, which there's going to be more tons mined. There's going to be higher grade mined. We expect there to be about 12,000 ounces produced in both campaigns three and four, which should get us to just slightly above 41,000 ounces of gold production for the year. So it's within our guidance, and that's what we're currently estimating as of today.

Yeah. It seems like a lot higher number than what we're projecting for the year, but we still maintain that guidance, and it's largely driven by the pre-stripping in the South Pit. You spent the whole first six months of the year spending money on that while also mining lower grades. As we get into this second half of the year, the pre-strip is behind us. You're going to have higher tons mined and processed, as well as the grade going up significantly. All those things together, we still expect to come close to our guidance.

Yeah, I think of the puts more as just an insurance policy, and I don't really focus on those. We're always expecting gold to be above $4,000, and we budget everything at $3,700. If you just look at it simply, you'd say $4,400 minus your $2,000 cash cost, you'd expect about a $2,400 margin. Because we're a 30% JV, I kind of more focus on what the cash distributions will be from the JV from the year, because they always do hold some funds back to pay for the next three or four months of production.

We should receive about $36 million in the back half of this year from distributions. If you apply, using that $3,700, that's using $3,700 gold. If you apply a $4,400 gold price, you'd expect to receive another $7 million. That should get our total cash distributions this year to slightly above $60 million if $4,400 gold holds.