Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Contango Ore Inc (CTGO, Financial) reported a significant increase in cash, ending Q3 with $36.2 million, up from $24 million in June and $15.5 million in December of the previous year.
- The company produced nearly 28,000 ounces of gold in Q3, generating over $62 million in sales, with a realized gold price of $2,250 per ounce.
- Contango Ore Inc (CTGO) received a $19.5 million distribution from the Peak Gold joint venture, contributing positively to its financial position.
- The company is on track to meet the higher end of its annual production guidance of 30,000 to 40,000 ounces of gold.
- Contango Ore Inc (CTGO) plans to increase production to approximately 60,000 ounces in 2025, indicating growth potential and increased revenue expectations.
Negative Points
- Contango Ore Inc (CTGO) reported a Q3 net loss of $9.7 million, including a significant non-cash expense of $22.9 million related to unrealized losses on derivative contracts.
- The company faces a high debt burden, with a current balance of $52 million, which it aims to reduce to $10 million by the end of 2025.
- There is uncertainty regarding future cash calls from the joint venture, which could impact financial stability if unforeseen expenses arise.
- The company's financials are complex due to its minority interest in the Manh Choh project, leading to non-traditional reporting of gold sales and costs.
- Contango Ore Inc (CTGO) is exposed to gold price volatility, which could affect its margins and financial performance, especially with existing hedge agreements.
Q & A Highlights
Q: Why don't gold sales and cash costs appear traditionally on your financial statements?
A: Michael Clark, CFO, explained that due to Contango Ore's 30% minority interest in Manh Choh, results are not consolidated. Profits appear as equity income, and gold sales are not core to the business, hence not shown as top-line revenue. This setup avoids confusion about profitability.
Q: Do you expect any more cash calls from the joint venture?
A: Michael Clark, CFO, stated that no further cash calls are expected unless unforeseen expenses arise. The last cash call was in July for $4.1 million.
Q: What is the current debt balance, and what is expected by the end of 2025?
A: Michael Clark, CFO, noted the current debt balance is $52 million, expected to remain the same by year-end. The plan is to pay down $42 million in 2025, leaving a balance of just under $10 million.
Q: How is capital being allocated between debt reduction and project advancement?
A: Rick Nieuwenhuyse, CEO, emphasized prioritizing debt repayment, followed by advancing projects like Lucky Shot and Johnson Tract. The focus is on maintaining strong cash flows and not overextending financially.
Q: What are the next steps for the Johnson Tract project?
A: Rick Nieuwenhuyse, CEO, mentioned that drill results will be released soon, and a Preliminary Economic Assessment (PEA) is expected by year-end. The focus is on upgrading resources and preparing for future development.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
