Good morning, ladies and gentlemen. Thanks for being here, and I'm going to be making forward-looking statements, but let's get right into it. We have three projects in Alaska. We're an NYSE American-listed company. We're on the GDXJ. We're part of the Russell 2000, so we have great trading liquidity. Our Montreal project is in production. It's a joint venture with Kinross. We own 30%, and we produce our share of production is about 60,000 ounces of gold a year, generating about $100 million of free cash flow at $3,500 gold. We've done this by not building a mill in a tailings facility. The grade of Montreal is about 8 gm per ton, so we basically mine it, put it in a truck, and haul it up to the Fort Knox Mill that Kinross operates outside of Fairbanks and produces doré at site there.
That meant we got our project in production very quickly, and we're basically going to do the same thing with our Lucky Shot and Johnson Tract projects. Lucky Shot is fully permitted, underground mine. We're currently doing a feasibility study there to generate a project that'll produce about 40,000 ounces of gold a year. Our Johnson Tract project is currently in permitting, but a very robust project, and I'll walk you through that as well. Just quickly on our share capital structure, we have a really tight share structure. Management owns about 20% of the company, so we're very much aligned with shareholders. We have 15.5 million shares outstanding. We've whittled down the debt that we borrowed, about $60 million of debt, to get the project into production for our share, and we're down under around $15 million of debt there.
You can see the list of groups that cover us. We keep getting more coverage as more people learn about what we're doing and what we're about. We have a five-year plan to produce 200,000 ounces of gold, and we can do that without diluting shareholders. With the cash we have on hand and the cash flows that we're making from Montreal, we plan to use that to get Lucky Shot into production, produce about 100,000 ounces of gold on top of the 60 that we're—or 40 more on top of the 60 that we're producing from Montreal. Give us two years and about $50 million of investment, and we'll get Lucky Shot into production again using that same model of putting rocks in a box and sending them up to Fort Knox for processing.
Following on that, about two years later, two to three years later, we'll have our Johnson Tract project in a position where we can make a mine construction decision there and double our production up to 200,000 ounces of production. We can do this without diluting shareholders. Again, we have 15.5 million shares outstanding, $100 million in the bank, and we're generating over $100 million of free cash flow a year. I don't think there's too many other companies that can triple production without diluting their shareholders. We refer to this as our direct shipping ore model. It's basically the biggest challenge for anybody, certainly in the U.S. and in North America, but anywhere in the world, it's difficult and costly to build mills and tailings facilities, tailings facilities specifically. We don't do that.
We try not to build mills and tailings facilities and take advantage of existing infrastructure, like we have at Fort Knox. With this, we call this a DSO model or direct shipping ore model. You mine at site. You do not even crush. Put the rocks in a steel box that has a lid so you do not have any future dust to worry about. They hold about 25 tons of ore. A forklift can move these boxes around, load them on a truck. The truck can take them down to a rail, train, or put them on a barge. We can do all this again without building mills and tailings facilities. That saves a huge amount of capital. It lowers our environmental footprint, and it just makes permitting a hell of a lot easier because basically, you are permitting a quarry operation. That is the DSO model.
What it means for you as shareholders is we get to production quicker, and we get there without a tremendous amount of permitting headaches. Let's walk through the projects. Starting with Montreal, it's on land owned by the Tetlin Tribe. They own the land. We were the first company to have a business arrangement with them and do any exploration work on their lands. There are 150 people in the tribe. They have a 3% royalty on a project that produces 200,000 ounces of gold a year. If you can do some quick math, they're very happy. They made about $20 million this year. Again, simple operation. Mine at site. The deposit's located on top of a hill, so from a permitting standpoint, it was relatively easy. Not a lot of water to worry about. Put the rocks in a stockpile.
Load them onto the truck and bring them up to Fort Knox. Build a stockpile there, and we process ore once a month in the middle month of every quarter. We produce gold four times a year. Through the first half of the year, we were ahead of our guidance. We guided to 60,000 ounces of production. We just completed a couple of weeks ago the third batch. We produced 2,000 ounces more than guidance, 60,000 ounces of guidance, 15,000 ounces a quarter. We are doing that under our guidance, all in sustaining costs of $16.25. We are well under that right now for the year. In order to get this project in production, we did have to borrow some money from the bankers. This was three years ago.
Everybody thought gold was—I think it was trading about $1,850 or so, and everybody's attitude was that the gold price was going to $1,200, not $4,000. We hedged some of the gold to get the loan, and we're most of the way through the hedges now. By the middle of next year, we'll be out from underneath the hedges. The hedge gold still makes money. It just doesn't make as much money, of course. We're making about a $1,000 margin on the hedge gold and not the $3,000 margin that we would if we could sell it all at spot. Come next year, we will be selling all the gold at spot about the middle of the year. We're down to about 40,000 ounces at the end of the year to deliver into our hedges.
We're still making lots of money despite the overburden of the hedges. With the hedges, we're generating about $3 of free cash flow per share. I think this is the most important slide in the deck because if you're a shareholder, you want exposure to gold, but you really want to use the exposure to cash flow per share because that's what matters in terms of metrics for you as a shareholder. When we're unhedged, this number goes to $8, and if we realize our plan of growing our five-year plan of growing our production towards 200,000 ounces of gold a year, that number's about $15. That's your exposure. That's why you want to invest in Contango and buy the shares today, because, first of all, I think the gold price is not done running, but you're getting exposure to a huge amount of cash flow here.
We like this model, the DSO model. What it requires is grade. You got to have a good grade so you can afford the transportation. We do not focus on sub-1 gm deposits. We focus on things that are much higher grade. You have to be close to existing infrastructure because otherwise, you have to permit that as well. We want to minimize our permitting footprint. We like working on private land because it is the easiest land to permit on. We work on state land. State is pretty good to work with as well. We like to avoid federal lands because the federal government is a pain in the butt to work with, even under Trump. That is our directive, and that is what we focus on. Our Lucky Shot mine, I am going to go through these relatively quickly. It is a two-hour drive outside of Anchorage.
You can drive there in a sedan. You do not need a four-wheel-drive vehicle to get there. We have outlined a small but high-grade resource, about 14.5 gm. This mine was in production between 1928 and 1942, produced a quarter million ounces at 40 gm per ton. That is exceptionally high grade. Back in those days, they would mine very narrow stuff that we would not mine the same way today, mainly from a safety standpoint. We also hand-carved the ore and separated it, high-graded it that way. We are going to mine on 3-meter average widths, and our grade that we are going to deliver to the mill is going to be somewhere between 10-12 gm. That is our expectation. We have got a small but high-grade resource outlined to date. We are underground drilling. Drill actually arrives this week.
We'll be drilling all winter and completing about 15,000 m of relatively short holes because you're right underground. You're right underneath the ore deposit. The underground infrastructure's in place, and it's fully permitted. We're fully permitted as a mining operation. Complete the 15,000 m of underground drilling. That will outline in the neighborhood of 400,000-500,000 ounces of resource. We've done enough, we call it pilot hole drilling. We know the vein structure's there. When this mine was shut down, President Roosevelt used the War Act to shut down all gold mining in the U.S. He also made it illegal to own gold. This mine was shut down administratively, not because it ran out of ore. We're basically just drilling down depth for where they mined that quarter million ounces before.
We tag in the Coleman Zone, which is basically the same vein, just offset by a fault. Then combined, they're going to be between 400,000 and 500,000 ounces of resource. Then we'll complete the feasibility study and subset that on the higher-grade ore chutes that we expect to run in the 10-12 gm range. Give us about 12 months to do the drilling and another 12 months to complete the feasibility study and put the underground infrastructure, the stope infrastructure into place to be able to mine the stopes. That's going to cost about $50 million and take two years. That's our plan to get this thing into production quickly. Again, we throw the rocks in a box and haul them up to Fort Knox for processing. We have an alternative.
There's a group that's approached us to send this stuff over to Taiwan for processing. We'll take a look at it. It's certainly an interesting option to consider. We have the railroad about 15 mi from the mine site here. We put the rocks in a box, take them down the rail. We can go north. We can go south. We've got a couple of options there. We'll obviously choose the one that we think's the best for the shareholders. Lastly, Johnson Tract is about an hour plane ride out of Anchorage to the southwest. Beautiful ore body, high-grade, polymetallic, gold, silver, copper, lead, zinc. Gold, silver makes up about 70%-75% of the value of the product. The base metals make up the balance. Base metals are now called critical metals.
That's a real help in getting things permitted under the current administration that has a real express interest in getting ahead of China mining base metals. This project is located on land owned by the Cook Inlet Native Corporation. They selected this land back in 1970 when they settled their Aboriginal rights and title with the federal government. You notice that there's a park around it. Their land rights precede the existence of the park. They already have land easements granted by the federal government , giving them access to the coast. We wouldn't have actually done this project without this. This is a very important part of the process, getting access to the coast and the ability to build a barge landing site. That's all in process now from a permitting standpoint.
We expect to have our permits from the state to build the tunnel, which will get underneath the ore body, basically repeating what we've done at Lucky Shot already. Now, this time we have to build the tunnel next step. Next summer, we plan to have the permits. We plan to have the permits in hand by Q1 of 2026. Next summer, we'll build the road over to the portal site. It's about a 3-mile road. It's all glacial till. It's pretty easy to build road there. We'll winterize camp, and we'll get the tunnel started. This is what the ore looks like. It's just an absolutely beautiful ore body. It averages about 40 m wide. Just to put that in perspective, that's half a football field. This will be relatively inexpensive underground long-hole mining. Put the tunnel in. The resource we've already defined.
We just need to get—we've defined as much as we can from the surface. We need to get underground, do the feasibility study, some mine plan, and a transportation plan. I kind of refer to that as feasibility light because we're not building a mill and a tailings facility here. Rocks in a box goes down to the port. Underground infrastructure. We did an initial assessment on this project. We released it in June. We used a long-term gold price of $2,200. That was probably a little conservative. You can see that this is a very robust project. All in sustaining costs are under $1,000 an ounce here. This is the absolutely beautiful ore body. Again, mine it, put the rocks in a box, haul it down to the barge landing site.
We're looking at acquiring a mill, not moving the mill up here, but just moving the rocks down there. We have the grade to do that. When you have 9 gm per ton, you can afford the transportation to an existing facility. Five-year plan, without diluting shareholders, build our production profile from current 60,000 ounces of gold a year to 200,000 ounces. Appreciate it. If you're around, happy to answer any questions. Thank you. Thanks very much.