Even faster than usual, I will say good morning, good afternoon, or good evening, depending on where in the world you are coming in from. As always, for Contango events, it is a very international audience, so folks coming in from Switzerland, from APAC, from Alaska. I appreciate everybody joining us. I have got with me today Rick Van Nieuwenhuyse, the Chief Executive Officer of Contango Silver & Gold, who was kind enough to put out a major corporate update right after Labor Day to keep us in the loop. Rick, how are you?
Good. Good to see you, Romeo.
Yeah, good to see you. Here is how today is going to work for the folks in the room. For those of you who are regulars, you can just stop listening for the next 30 seconds. You have heard this a million times. There is a chat button at the bottom of the screen. I really encourage you to ask questions at any point during today's event. It is probably going to be a shorter one. We are looking at about 30 minutes , but as usual, I have got a bunch of questions, based on the release. I do want to hear from you guys as well. Some questions were submitted in advance over email, so we will make sure we get to those. Then any questions that come in from the live audience, we will pick those up as well. Two other pieces of housekeeping.
This is being recorded, will be available for replay, probably midday Eastern Time, certainly today. It will get right into your inbox. It will also be on 6ix's YouTube channel. There is also a Request Meeting button at the bottom of the screen. You can press that to have an opportunity to meet with the Contango Silver & Gold team. I will be passing that along with your registration information, as soon as the event ends. You can press that at any point during today's event, including after it ends. That is the boring stuff. Rick, I want to get into the press release, because yesterday's release reads like a checklist where it is one of those, every box gets ticked. You have three core assets, two jurisdictions, drilling, road-building, underground developments, all on time, on budget in a single field season.
Most companies your size and bigger and smaller struggle to pull off one of those programs. I would love if you could give us a sense of what it takes behind the scenes to run a wild season like this with so much going on.
Well, I think I said earlier this year that this year would be about execution and just getting things done. That is pretty much what we did, and it really starts with putting the whole team together. Remember, we merged two companies, Contango Ore and Dolly Varden Silver. That was really the first thing to do, was to get the teams together and integrate the two teams. I think we have demonstrated that we have done that flawlessly. We have had a very successful year, very busy year. I think we are over close to 70,000 meters of drilling, in total between the two main projects. That is exploration drilling, infill, expansion. We have also done geotechnical work and things like that, at Johnson Tract. Yes, it has been a very busy year, and all projects have executed exactly what we had planned to do.
At Lucky Shot, the underground development, the exploration drilling, announcing results. We are on track to release an MRE on that early next year, first half of next year. Johnson Tract road building, we actually got more accomplished there than planned. We got the laydown area completely done, which we had actually expected to do next year, but we got that done this year. So now the road is connected between the camp and the proposed portal site. Permitting, on the portal site is, I will say, substantially complete. You never quite complete permitting. You are always permitting something.
That is it. Or renewing it, or there is always the permits.
Correct. It's an ongoing process.
Sure.
We are substantially permitted there to build the tunnel. Next year will be about building the tunnel, then it will be about doing the infill drilling there. Of course, Kitsault, I think that's the one that really demonstrates how the teams have worked together very well. We had planned for a 40,000-meter drill program. We are going to be over 50,000 meters. That's just because of the efficiencies and just the team working together. That's a difficult place to drill. It's a remote project, helicopter support, it's steep terrain. I really have to thank all of our contractors.
Sure.
The helicopter contractors, the pad builders, the tree fellers, the drillers, the geologists. It's been a very busy year. I think the thing to emphasize, it's been a very safe year. We've done all this work, the 70,000 meters of drilling, the road building, the bridge building, underground drilling, underground tunneling, and it's been 100% safe. No LTIs, and that's how we want to work, and that's how we want to execute our programs.
Awesome. One thing I noticed in the PR is a pretty big Manh Choh story in the release that I think might be getting less attention, or I've certainly seen less attention than it should be getting. The mill modifications for recovering the higher grade sulfide ore from the south pit are done and working according to plan. That was one of the real technical question marks coming into the year, as far as I understood it. What does it mean now that that's proven out, that's behind you?
Yeah, the first half of this year for Manh Choh was always going to be the struggle. Two quarters, the first half of the year was about transitioning from north pit to south pit. Lots of pre-stripping. So, you've got a lot of equipment moving waste material to get at the ore in the south pit or the main pit. And of course, that ore is more sulfide rich. It's higher grade and it's more sulfide rich, which means you need the oxygen plant installed to make the recovery sufficient. And so that was done. It was completed the last quarter, and it's now operating. And so we should see our recoveries in the 80s to low 90s, depending on the sulfide. It's the amount of sulfur that really dictates how efficient the oxygen plant works.
So that's done, and we'll look forward to, we're in the middle of the third batch for the year. And we'll probably run all month, maybe a little bit into October. So the production will actually go across probably two quarters. I'm not sure how Mike will report that, but I'll let him figure that out. But yeah, it's an exciting time for Manh Choh because those higher grades in the main pit, the main pit because it's the bigger one. And now that the pre-stripping is substantially done, we should see our costs come down and our production go up. And we'll get the real benefit of that next year, where we're guiding towards 75,000 ounces of production and at a lower cost, $1,200-$1,300 all-in sustaining cost.
Wow.
And now that again, the oxygen plant's installed. In fact, we have a redundant system that they've installed. So we should see those efficiencies in the recoveries and in the throughput.
Okay, great. I do want to move over to Lucky Shot because that's the news that's excited me this year. A year ago, nobody was talking about a KM vein system. So now your drill contractor arrives this week to put about 1,100 meters into it from the new West Rift extension. So for investors just catching up or hear that mostly follow another project of Contango's, what is KM and why is this jump in the queue for everybody's attention?
Yeah. The KM vein, it is a new discovery, and that is what is exciting. Whenever you are exploring a district, which the Lucky Shot project is a district. It is not just one little vein. There is a whole series of veins in the district. But at Lucky Shot itself, the vein that we were exploring is basically almost east-west striking and dipping to the north. When we were building the tunnel to evaluate that with the drilling, we use the fan drilling type drilling across the tunnel. We came across a vein dipping at right angles, basically a conjugate vein set. We named KM after Keith Miles, who is one of the fellows who worked for us at the project. Sadly, he passed away, but he had been a long time in the district. He was a miner in the district for quite a while.
That vein is dipping at right angles and it is a new discovery. It has never been explored, never been described in the district before. That makes it exciting, and the fact that it was running up to 10 ounces per ton. That also makes it very exciting. Grade is king, as they say. The vein was dipping away from us at the end of the tunnel, so we now extended the West Rift tunnel about 100 meters. The vein is above us, and so we are going to do fan shots like this above us. Just spray up holes like that. We are going to outline an area of probably 100 meters by almost 100 meters. So it is a little irregular shape, but it is roughly that. When we are seeing these multi-ounce grades, you can build ounces quickly.
That drilling will get underway at the end of the week. The driller should be all installed. The airbag is installed, the electrical and water is installed now. So, they will get up and running and it will probably take about a month to get that drilling done. Then unfortunately, it takes a couple of months to get your assays back. So that is always the frustrating part of exploring this, especially this time of year. Everybody and their brother is out drilling, and so the labs are packed. But that information will come out before the end of the year, is what we are planning.
Sure. People email in every day asking, "Why has not somebody put an assay result yet?" I am like, "That is not really always up to them, Dave, just so you understand." These labs are real backed up sometimes. It takes, in heavy season.
Yeah. It's a frustration that I think everybody in the industry deals with right now. We'll get sidetracked on that topic.
Yeah, I know, for sure. I do want to talk about surface drilling at Coleman, because it wrapped with 29 holes, including that 2.45-meter hit grading over 86 grams. Now you got 10,000 meters of underground drilling running through February, feeding the FS, which is scheduled for next year, if I'm not mistaken. So how did KM and the Eastern L2 extension change what that study could look like versus what you were modeling six months ago? Because I feel like it's changed pretty significantly.
Yeah. Certainly adding the KM vein in the mix, and obviously it's still exploration, so we planned holes where we could, and it ran really well. So we'll do this 1,100 meters of drilling and see what we get. But clearly, what's significant about KM is it's right there in front of us. That takes very little development work to actually put that into production. So if we end up hitting sort of a lot of + 10-gram material in that vein, we'll look to integrate that into the overall mine plan. It may well change our overall development scheme for the deposit. But we're not there yet. We're still gonna go do the exploration. Meanwhile, we're almost finished building the East Rift, which is basically just opposite the West Rift down the in-search tunnel, and then one goes off west and one goes off east.
The East Rift's almost done, and we'll bring a second drill rig in and start drilling that in about a month or so. That's targeted on the classic Lucky Shot vein system. In fact, it's literally right underneath where they mined it before.
Meanwhile, we advanced the tunnel, and we built two more drifts further down, further at the end of the tunnel, to continue extending the Lucky Shot vein down dip, further down dip.
Sure.
Obviously, if we really like what we see at KM, we will adjust. The exciting thing about KM is it has never been explored. So right now we are just going to test 100 meters of it, but
Sure
if it keeps going, we will probably keep testing it, especially if it keeps running multi-ounce.
Yeah.
We like multi-ounce. It is
It's exciting to have drill core that's worth a big pile of money. Just the drill core is pretty neat. I do want
Well, it is all this visible gold, right? The VG
Yeah
that gets reported, and that is exciting. It's always exciting for a geologist. By the time I get to look at the core, it's got all these little red circles on it, so it makes it really easy for me to find the great gold.
What some people don't know is exploration geologists are the biggest adrenaline junkies possibly in the world. These are like base jumpers. I don't think people realize that. I do want to talk about Johnson Tract for a second because I'm bouncing around your projects. I hate to contradict you because I know you've previously described it as a permitting story, but it feels to me like this summer it graduated into a bit of a construction story, because the road from camp to the portal's built, two bridges are in, portal pad's done. What does having that pad sitting, ready to go, unlock for 2027 for this project?
It sets us up for continued execution and get the tunnel built. The team that we're building at Lucky Shot to build tunnels, that's going to transition really nicely to get all those folks who we work with, and we've worked with for a while now, to go over from Lucky Shot down to Johnson Tract and start building tunnel there. A couple of things we have to do to accommodate that, because once we get underground, we want to be underground year-round. We're upgrading the camp. We're starting to work on that this year. It won't get completed until next year, but next year, we want to be working year-round, through the winter. There's a substantial upgrade to do to camp. But yeah, the portal site's all set to go. I think you see from the photos that the bridges are well-built.
They're nice stout bridges. The road looks great. You can drive a sedan on it if you want. It's a good road. We've got lots of material to work with, and that's a big advantage of working at Johnson Tract, is you have a big river system right through there, and so you've got a lot of material to work with. It's nicely channeled, and obviously that's what the bridges and the abutments to the bridges do with gabion baskets, to keep the water under control so it's not going all over the place. So, yeah, it's been a good solid year of work. We got a great crew out there as well. Again, they work safely, and so we're really proud of what they've accomplished in a relatively short period of time.
Yeah. No, it's a lot going on. Speaking of that, here, something I want to talk about Contango generally, and then just to summarize all the work. You have 50,000 meters at Kitsault, 5,800 meters plus an underground program at Lucky Shot, road construction at Johnson Tract, all paid out from the Manh Choh cash flow without going back to the markets, which right now is great. That's good news for everybody. I'd love if you could talk about the financial discipline it takes to keep all these programs on budget at the same time.
Yeah. That's where the teamwork comes together. That you plan out a budget, you put it forward, then you critique it about, are you really planning out things accurately from a costing standpoint, but also from a timing standpoint. We just had a big meeting yesterday where we had the whole team together discussing, here's what we've accomplished this year, what are the plans for next year, and what does it need for dollars? What does it need for people? Those are the two key things. Then making sure you get the timing right so that you're doing the appropriate work at the appropriate time so you're not trying to get things done when the weather's terrible.
Sure.
Weather's hard to predict day to day, but there are definitely rainier parts of the season. I'll give you an example. We got the surface drill program at Lucky Shot shut down a little early because we got about 6 inches of snow. We want to work safe. That's a big criteria for us. We said, okay, we had a couple holes that we could drill, and we said, "Let's just wrap it up." This snow was not one that was going away. You could sort of feel it was-
Sure.
6 inches going to 12 inches, not a nice sunny day tomorrow. Those are the sort of things, if you get cut a little short, it's not a big deal. Those are holes we can drill next year or the year after.
Sure.
But that timing and just making sure you've got your budgets accurate. I don't want to say tight, because we always want to have a contingency in things-
Of course
that we don't overuse. Most of those are due to weather delays. We had a lot of equipment working this year. Road construction equipment. We had a lot of helicopters moving equipment. Again, doing that at the right time of the year and doing it safely is the key parts of staying on budget.
Okay, fair enough. I'll certainly say, being from Ottawa, you can tell when 6 inches of snow are going to be a keeper. You just get a sense for it. These are the ones, these are sticking around. You do get a sense.
It was a really, really winter this year in Alaska for sure. I think it set a lot of folks down early.
Yeah, I saw pictures of snow caps in August still, which, man, that is, it does get different up there. I want to look into 2027. This is a follow on, I guess, from the last question, because each one of the assets is asking for capital as a fact that you got underground drilling through February, drift development camp expansion at Johnson Tract, and obviously the engineering work at Kitsault will go on after the MRE. How are you thinking about prioritizing these dollars? How does that math work for the team strategically?
Well, I guess really, it starts with Manh Choh and the production we're expecting out of Manh Choh. We're using a $3,700 gold price to do our financial projections. I think we're being on the conservative end of things
Sure
there. The cash flow that we're going to generate, we obviously want to spend more than that. We've got things planned out where I'm going to predict a little bit here. We're going to get a feasibility study done at Lucky Shot. Most of the work gets done this year, in terms of the tunneling and the drilling. We'll spill over into about by February of next year. Then it's just working with the data to complete a feasibility study. Again, I call this feasibility light because it's with the DSO model, we're not building a mill and a tailings facility and a big power plant to run all that.
Sure.
It's definitely a mine plan and a transportation plan, effectively, and, working on an offtake arrangement for production. I think for Lucky Shot, that's pretty straightforward. Then we can obviously pull the trigger in sort of the second half of the year on the development plan. Here's the feasibility study. We're going to execute the feasibility study. At Johnson Tract, the tunneling is based on what we're doing at Lucky Shot this year. We're going to be doing at Johnson Tract next year. We probably won't get started until we have mobilized equipment in and all that, so we probably actually won't get tunneling until August, September, the latter half of the summer, because you got to get everything set up. But then you're doing it all year round because now your campus is upgraded.
At Kitsault, I think it'll be a little less drilling. We had five rigs turn in this year. I think it'll be only a couple next year, and we'll be working towards, we'll update again the MRE. We've got one coming out here shortly, by, sort of before the end of the month. But then we've got another 50,000 meters of drilling to get this year to incorporate. So that'll get updated first half of next year. The assays, probably won't get all the assays back until January.
I see. Yeah.
It's late in the year, and then, I'd say, by the end of the first quarter or early second quarter, we should have the MRE updated. I guess all the programs are We're not doing all the same things in all the programs. They're all slightly out of phase, which is nice because then you've got, like I said, the drill team, and the underground mining team from Lucky Shot can basically transition over to Johnson Tract. You know you've got a good group of people who have worked together and can work safely and get things done efficiently.
Great. I know, I'm just going to talk about Kitsault really specifically for a second before I broaden out. This was the first full field season with Kitsault under the Contango Silver & Gold banner. All eight of the previous target areas were drilled, plus Homestake. 123 holes and an updated resource assessment landing, as far as I understand, in the next few weeks is our guess. When that MRE comes out, I encourage everybody to keep a keen eye out for it. What should investors be looking at to judge whether this season delivered at Kitsault?
Yeah. Obviously there's a total number, and we'll have moved a significant amount of the Inferred resources into Measured and Indicated.
Indicated is really the one to focus on.
Sure.
As underground mines, you do not really get Measured and Indicated until you get underground. That is a significant part. Obviously, we have a new zone that we are drilling on the 470. That will not come into play until next year because that is a new discovery this year. We will certainly highlight that when we release drill results, which will also be coming out here shortly. If I just stick to the MRE, it is basically infill drilling and overall expansion of the resource. Keep in mind, this resource that is out there in the public, this 60 million ounces of silver, almost 65 million ounces of silver, 1 million ounces of gold, that is quite dated. I mean, it was
Sure
sort of rebranded. I think it is like a 2017, 2018 era resource, and there has been 150,000 meters of drilling since.
Yeah, geez.
A lot of it infill.
The focus of the program was not to make 65 million ounces silver, 150 million ounces silver, whatever. It is to do infill drilling and to really understand the geologic controls. It is a much tighter resource estimate. You will see a lot less Inferred. And obviously, if you have new discoveries, you will have more Inferred on those. Then that obviously is what a lot of the drilling this year will update as well. At the MRE that will come out here in a couple of weeks, look for the Inferred transitioning into Indicated. Obviously, the gold and silver prices have changed significantly since that was released in 2023, I think it is, under the Dolly Varden banner. And the gold prices and silver prices that were used then will be different from now.
We are going to stick with the consensus pricing, which I believe is in the $50 neighborhood for silver and $3,500 for gold.
Sure.
There will be some changes, and when you increase the gold price, you lower your cutoffs or you lower your average grade, and all those dynamics have to work. And we will try to explain all that in the press release, but we will have another forum like this, and we can talk about it in more detail.
No, that's good. I look forward to getting into those numbers in detail. I personally can't wait, like I'm sure investors, I'm sure everybody calls you says, "I can't wait." There you go. I do want to close on the calendar, and then I'm going to get into questions. I know there's a lot in the chat. There's a bunch that came in over email. This last one from me, I promise, then I'll shut up. But I want to close the calendar because Torbrit North share assays are imminent. Kitsault MRE, as we said, lands probably this month. The rest of the Lucky Shot surface assays come in October. Q3 financials, November. Underground results close to the winter. Rick never takes a vacation, as far as I understand it. But for someone new to the story, which of these moments matters most?
What should a keen investor be keeping their eye clearest on for the rest of the year?
Well, I think the silver story is a great story, and from my perspective, we wanted to acquire Kitsault because it's a world-class asset.
Yeah, sure.
There are not very many high-grade silver projects, and Kitsault is a silver mine. It has got some lead and zinc and some gold as well. By the way, on the MRE, we are not going to see a huge increase in the gold because that was all infill drilling at Homestake. All the gold is at Homestake and Homestake Silver. You are not going to see that number grow significantly because, again, that was all upgrading of current resources. There is going to be a lot of news flow on Kitsault and on the silver grades. It is a high-grade silver deposit. There is a significant amount of gold at Homestake and Homestake Silver. We kind of divide the district into these two target areas. The Torbrit, Dolly Varden to the south, which is silver with lead and zinc, very little gold.
Up on the north, you have got Homestake and Homestake Silver that are silver-rich, but also have a significant amount of gold. Again, low base metals. I would say, in terms of news flow, there is going to be a lot of news flow on Kitsault over the next several months through the end of the year, basically. It is silver, silver.
Awesome. No, exciting. Okay, going to get into questions from email and then stuff in the chat. The first one, it was a fairly long, complicated question, but what it amounts to, I will stick to, I think, just the guts of it, which is, can you update us on the mill?
Yeah. Short answer is, I do not have anything to update you on other than we continue to work on a number of opportunities for building a mill or acquiring a mill. We are looking at both those options. I hate to say, "Stay tuned," but that is really all I can say right now. We are definitely advancing those discussions on multiple fronts.
Appreciate it. One person wanted to know if you could comment on Manh Choh's seasonal exploration activity. They want to know if there's any chance, anything between you and Kinross for life extension for that mine.
Yeah. Short answer is, we don't have any results yet from this year's drilling. I will say this year's drilling was interrupted by a pretty serious fire in the Tok area.
Sure. Yeah.
Literally right near the town of Tok. Unfortunately, a number of people lost their homes. That definitely interrupted our field season, and I think basically cut it short. Along with the early snow that I talked about, all those things sort of came together. We will have results of this year's drill program out later in the year. I am going to guess towards the end of the year. We will have our next joint venture meeting, I think, in November, so that will be probably the time period where we will get some more results on the exploration front.
Okay, great. Three people emailed in to ask you a question that we have already answered, which is when are you expecting an updated MRE for Kitsault? As you said before, probably this month. Stay tuned, folks.
Couple weeks.
Questions from the chat. The first one, I have already warned this might be a question that we end up sending to Mike because there is a lot of math here, but I will throw it to you anyway, Rick, for just any guidance that you can give. He wants to know, assuming you hit your 2027 production guidance of 80,000 ounces at $1,500 AISC, what is a good range of operating cash flows for fiscal year 2027? Now, he wants it at 5,000 ounces of gold, but do it at whatever gold you have an answer for.
5,000 gold price?
Yeah, that's right. That's what he's looking for.
Oh, it'll be well in excess of $200 million. Yeah. Probably almost $250.
Okay.
If you've got $5,000 gold. Yeah. Yeah, it's a big number. Next year is the banner year for the project. If you have a $5,000 gold, we'll have a lot of cash flow.
Yeah. As a degenerate gold bull myself, I think we'll see $5,000 by the end of the year myself, but you never know.
I won't be surprised. I mean, nothing is fundamentally changed. We're still printing money, and The Fed's between a rock and a hard place, and The Fed's fighting The Department of the Treasury, and interesting times, but you better own some gold and silver.
That's certainly my view, too. Physical stock, everything available to you. The same person just noted in the chat, we should communicate this every time we have a public update. Thanks for that note. I agree. I will have that question, Brad, every time this comes up, so Rick, I'll make you do some math every single time. A couple of additional questions. Wesley wants to know what indigenous groups you work with at Johnson Tract.
The Johnson Tract project is owned by an Alaska Native corporation, Cook Inlet Region, Inc. Then there are a number of villages that have tribal councils. Kaguyak is the closest one on the same side of Cook Inlet, and then the Ninilchik and Seldovia, Savoonga are other ones on the other side of the Cook Inlet. Then Kenai. Those are probably the main ones that we've had on a regular basis interaction with. We're currently looking at doing some work for some gravel material. So we're working with two of the tribes on that because they own the surface. I shouldn't say the tribe, it's actually the village corporation that owns the surface rights. So we're working with those on a pretty much on a regular basis. Yeah, so those are the main ones.
They're basically all around the Cook Inlet area, and hence the name Cook Inlet Region, Inc., further Regional Corporation. Regional Corporation owns the subsurface and the surface at Johnson Tract proper. But the village corporations own surface lands elsewhere, and that's why we're working with a couple of them on some potential borrow material sites for building a road down the-- when we start building the road down to the coast, that's where we're working with the villages.
Okay, great. Trevor wants to know, he says, "I don't think somebody's curious, could opposition at Johnson Tract cause any challenges for the next stage for the project?
I think there's a lawsuit out from the Center for Biological Diversity, Cook Inletkeeper.
Center for Biological Diversity is a national NGO. Cook Inletkeeper is a state of Alaska centered NGO. Their main concern is the beluga whales, an endangered subspecies. The Cook Inlet beluga whale is an endangered subspecies. We're doing a lot of work to understand where the whales are and where the whales are at certain times of year, so we understand places we should try and avoid. Those studies are ongoing right now. We've got basically a whole year's worth of data now, or close to a whole year's worth of data. All that'll be incorporated into the environmental permitting process, which is going on for building the road down to the coast and building a barge landing facility. All that will be in there. All the required permits-
on the federal side are part of FAST-41. If you go on the dashboard, you just go to FAST-41, and you just type in Johnson Tract, it'll take you right to the page, and you can see all the permits that we're required to do, all the work we're required to do to get the permits and understand the timing. Obviously we have to stick to getting all of our work done on time to stick to the overall timeframe, which we're doing. The process will play out over the next two years here. By May 2028, we should be in position to start construction of the road and the barge landing facility.
Okay, great.
Again, the basic question was, is there potential for a lawsuit to delay the project? We are in the United States, there is always potential for lawsuits. That is just part of the terrain. We think we are doing things in a way that are minimizing our environmental impacts at Johnson Tract because of the approach we are taking with the direct shipping ore model by itself.
Sure.
Obviously we are collecting as much science as we can to understand specifically where the beluga whales are and when they are there.
Right.
From a standpoint, winter or summer, where they are coming and where they are going. We will understand all that, and we can design a program to minimize the impacts.
Okay. Appreciate it. Pivot back to math. Again, I'll throw this to Mike on email if you don't have it on top of your head. Do you know where net debt will end fiscal year 2026 and fiscal year 2027?
Yeah. I don't have exact numbers in my head, but I think it's around $47 million currently. By the end of next year, it'll be gone.
Okay. There you go. Appreciate that. If you're looking for any more real specifics, Brad, I will get you connected to the team following. One question from Gillan from the chat. How did the North Pit at Manh Choh's production compare to what was assumed in Contango's reserve report?
That's a great question. I'll bottom line it. Ounces are accurate. Total ounces tends to be more tons and lower grade, and that's not an untypical relationship. We have something called a grade-tonnage curve. You can buy more tons at lower grade and get the same ounces, and that is more or less what we're seeing. I think that's an outgrowth of how the resource was estimated. I don't want to get too technical here, but it's a skarn-type deposit, so it tends to be at really high grades over a relatively narrow width. When you're estimating those, what the model is telling us, is that we've overestimated grade and underestimated tons. When you're mining, you're obviously mining at a much more detailed level than your block model is predicting. You have a lot more data points.
Pretty much consistently, we are seeing slightly lower grades and more tons, but the same ounces.
Okay.
If that makes sense.
Somebody notes from the chat that Contango Silver & Gold currently trades for only 2x cash flow, says that is insane. I am inclined to agree. I will ask you to make no comment on that, Rick, but that is just a comment from the chat. One question, I think it is a good opportunity to talk about how Alaska Native Corporations work generally, in the U.S., because they want to know what is the Indigenous group's position on Johnson Tract? How do they feel about the project?
I would say that, obviously they selected this land for mining.
Yeah.
I won't get into the long story, but the short story is that before they allowed the Alaska Native Corporations to form and select lands, the state and federal government took all the lands that had oil and gas potential. Alaska Native Corporations were left to select lands that had traditional cultural importance. Then, in terms of economics, it was mining and trees. That was the order of how they ended up selecting the land. In short, Cook Inlet Region, Inc. is very interested, and they have a royalty. It's a classic mining arrangement, mining lease, very much like you did at Manh Choh. The tribe has a royalty, so the tribe has done really well, as their mine has generated lots of free cash flow and lots of royalty payments. That'll work the same way with Cook Inlet Region, Inc.
They're very supportive of the project. They want us to do it right. They don't want us to go out there and make a mess.
Of course. Yeah.
That's why we have regular meetings and they wouldn't allow us to become involved with the project if we were going to make a mess. That's their land. They're not going to allow that to happen. That's the thing with private landowners. Private landowners take care of their land.
Yeah. Seriously.
If you want to go see a mess, go look at something that the government did.
Yeah. Fair enough.
Yeah, I think in Alaska, you have Alaska Native Corporations, village corporations, their lands are surface lands, and they tend to be right around the villages and lands that were traditionally important to them. And then you have tribal governments. There are a lot of different layers to work with and interact with. Look, Cape Alitak is one of the villages. It is one of the furthest ones away from the project. But they are aligned with the Center for Biological Diversity. So they are not in favor of the project. So not all the villages are supportive, but that is just part of the politics and part of the dynamic that you have to work with.
No.
We try to work with all the regional. Obviously, the regional corporations are the landowners, so we work very closely with them. The villages we work with and interact with, and same with the tribal councils.
No, very helpful. I appreciate the extra context there, because I think a lot of people don't understand, especially our Canadian viewers, because it's a very different setup.
Very different. Yeah.
Very different setup.
Alaska is very different from anywhere else in the Lower 48, or what we consider the Lower 48.
That is true.
It is just very different.
Yeah. It is a tough one, I think, for folks to understand. I will close on the last comment in the chat. This is from Bruce paraphrasing, I believe, Ronald Reagan. If you want something screwed up, ask the government to come in and fix it. I am inclined to agree. Rick, thank you so much. I think this was a great update. I think everybody should read the release in full. I hope you got some extra context from this interview. If you have any additional questions, please do hit that Request Meet button at the bottom or reach out to Contango Silver & Gold at any time. I will be sure to answer your questions very quickly. Rick, thank you so much. Really appreciate your time, as always. I think this was really helpful extra info for the release.
No, appreciate it, and thanks for great questions. If you have any others, don't hesitate to send them in. You can also just send them in to info@contangoore.com, and we'll certainly get back to you.
Awesome. Thank you, Rick. Thanks everyone for joining. Have a great day.