Rick Van Nieuwenhuyse: Contango's Next Phase of Gold and Silver Growth

0:15Trevor Hall: Hi, we're going to head up to British Columbia and Alaska here with Contango Silver and Gold. that do trade on the NYSE American and the TSX with CTGO. Happy to welcome in CEO Mr. Rick Van Neuenheiser. Rick, good to see you in Zurich. We tend to usually do these things in other countries. Exactly. Well, it's busy here in Zurich, so it's good to see you again. Yeah, well, this is the first time in quite some time you and I have been able to catch up, actually. I have seen you here in a couple of conferences on the road here. How is this fall conference season going, post-Kent of merger here? Yeah, look, there's a lot of interest.

0:55I mean, the whole sector has been sort of reset to a pretty significant discount to where it was, say, earlier in the year, first Q1 of this year. Yeah. So, you know, it's been tough to see us spend$75 million on all of our projects this year but have a retracement in the share price. but frankly it's a good time to be marketing because it's a good time to buy. So there's always a silver lining to these things. So we've gotten a lot accomplished this year on our three exploration stage projects. We continue to generate cash flow from a Moncho operation. We just put out general guidance that we're going to come in in terms of gold production on the lower end of our guidance, but we're going to meet guidance.

1:42And we're seeing costs go up, no question about that. So mostly energy? It's diesel price for sure. I'd say the three main components are diesel, your consumables in general. And then it's people. I think there's just not enough people to do all the work that needs to get done. And so people are high grading, making a better offer over here, a better offer over there. So you're seeing an escalation in salaries for good quality people.

2:20Trevor Hall: We're going to kind of go through each one of these kind of verticals within the company. But obviously, let's talk about Moncho because that has been your cash generator. You are guiding kind of towards the low end of your range now, but that was because rain kind of cut into your third campaign for production. Can you walk us through exactly what was happening and then maybe talk about next year? What's the plan to protect next year from something similar happening? Yeah, so the rain was a bit of a fluke. It had nothing to do with Manchow production per se. The rain was filling up the tailings facility at Fort Knox, and their water balance worked because they generally used the water in the mill.

3:08So that's why we had to cut the Manchow production short, because obviously you're only running the mill at half capacity. So when you're running Manchow, actually less than half capacity. So long story short, that was a bit of hopefully a one-timer. I mean, it was an extremely heavy rain in September that resulted in them having to turn the Fort Knox mill back on, which consumes water and then allows them to meet their water balance. So what it meant for us is we had a shorter amount of production in Q3, but the ounces are there, the tons are there on the pad at Fort Knox. They'll get run in Q4, which actually just started later last week.

3:54So we'll get the ounces, and I think our costs were high this last Q3 because we only produced a smaller amount of ounces than we would have normally. Yeah, because you paid for everything except, you know, the actual mill process. You paid to truck them up there, you paid to mine them, you paid to stock buy them. So we'll make up those ounces in Q4. And then in terms of Q, in terms of 2027 guidance, we won't really get that officially from Kinross until December. That's when we approve the budget for 2027. Okay. But in general, we're looking at probably 65 ,000, 70 ,000 ounces of production for our 30 % share and costs sub -$2 ,000 an ounce.

4:44Yeah.

4:44Trevor Hall: Okay. I mean, there is a little bit of the other line of managing a toll milling situation like you are is obviously it keeps costs down. But then you don't really hold the keys to your own destiny, right? You'll be holding to somebody else. and what they do. That is actually the same as the royalty company. Sure. I mean, the royalty companies say they don't have risk, but they don't have actually any control on their risk. Yeah. There's always operating risk. Right, right. You know, things like rainstorms, and that affects, when anything that affects production is going to affect your cash flow.

5:19Yeah, yeah, obviously.

5:20Trevor Hall: And we saw a lot of operations in South America get, you know. They've all had to adjust their sights. Well, we're talking about an El Nino, or Super El Nino type of season again. Are you kind of watching those forecasts to potentially have this happen, protect yourself from making sure it doesn't happen again? Yeah, I mean, look. Are you a meteorologist now, Rick? Not in the least. I mean, again, the beauty of Moncho for us is that Kinross worries about all the day-to-day headaches that there are in our operation. and that allows us to focus on advancing our exploration development stage assets, which we've done.

6:04So, I mean, there's always a good and a bad. You know, going forward, and this is really particularly with regards to, actually, all three of our projects, we want to be the miner at Lucky Shot. I hope to be able to send it to Fort Knox, and I expect that that's what we'll do. We're going to look at a couple of other options, just nothing else to keep Ken Ross Fort Knox honest. But, you know, for Lucky Shot, we've got two drills turning right now underground. We'll have all the drilling done by about February, by the end of February next year, and then give us a month and two to get all the assays put together, and an MRE should be out in May.

6:47And then we'll use that then to do a DSO feasibility study. And with Fort Knox being sort of the most likely outcome, but we will evaluate sending it overseas. Ocean Partners, you know, they've had, they sent us a term sheet that, you know, might make more sense. We'll see. And then, you know, like I said, I think Fort Knox is, you know, they've got plenty of capacity at the mill. We already have a business relationship. So I think that's more than likely what's going to happen there.

7:20Trevor Hall: Very good. But we'll mine. We'll be the miner and literally put rocks in the box and send them up to Port Knox. Okay. I think you've said that to me like three or four times, and it just comes off the tongue. All right, let's talk about kit salt. This was pretty big news for exploration. 56 ,000 meters drilled. That's 40 % over what was originally planned. So what did the extra meters get you? Give us a general sense of what you accomplished with exploration. Yeah, so just to explain why we drill more, well, we had planned to do some road reconstruction, but it turned out we needed a few more permits and some more evaluation work before we could get that done.

8:01So that was a good part. But we did have true efficiencies in drilling, and so it's more infill and expansion drilling. Most of that drilling is directed to infill and expansion. on the MRE that we had just put out in September, that the headline number is 160 million ounces of silver equivalent, 89 million ounces of silver, a million ounces of gold, and then some copper, lead, and zinc as a relatively small amount of byproduct credit there. It's a pretty sizable resource, and obviously with the 56 ,000 meters, it's going to get bigger. I suspect it's going to approach 200 million ounces of silver equivalent, And most of that will be additional silver because the gold portion of the system up at Homestake, most of that was infielding.

8:50So it's a solid resource, and it's solid. What I really like about it is the grade, and that's what I've always liked about Kitsalt. We're looking at a resource that's in excess of 10 ounces per ton silver equivalent. You can make a lot of money on that kind of a silver grade.

9:06Trevor Hall: Where is most of the resource located? Because there's a lot of different deposits. Yeah, and that's one of the reasons why it took a long time to put the resource number out. We were hoping to have it out earlier, but the data was in an old GemCom software, and so it took a lot of working to get it into a modern database. So there are seven different deposits. There's two up at Homestake. Homestake, original Homestake, used to be called Homestake Ridge. Homestake Silver, which is a bit of a southern extension of that same similar ore body. It's slightly offset, but it is silver-rich. Home stakes, mostly gold and a little bit of copper, minor silver.

9:46And then the other center of gravity is what we call the Dolly Varden area. So that's Dolly Varden mine, Northstar, Torbritt, Wolf, and Kitzel. And so they're all kind of in a bit of a cluster. And one of the things we noticed when we were doing the resource estimates, and you have to appreciate these were all identified at different times by different companies. And so, for example, Torbred is on the east side of Dolly Varden River Creek, and Northstar is on the west side. They're in the same stratigraphy, and they have the same style of sort of nephothermal and replacement style mineralization, almost stratiform.

10:32And so we said, well, geez, they look an awful lot of light, but nobody's ever really drilled in the middle because it's really steep in there. so we set up some monster drill pads and finally drilled them. They look like they're connected now so we don't have all the results back.

10:46Trevor Hall: You're waiting. They're waiting. But visually you can... This is a nice ore. It's perarge right, prustrite. So the ruby silver, so they really stand out. It's native silver. It's a canthite. So you can tell when you're in mineralization or great mineralization. How did Wolf itself kind of line up in this resource? What did you get out of Wolf? I remember Sean was really excited about this. It's a solid ore body, good mindable widths. I think it was in the neighborhood of 30 to 40, 30 million ounces. I don't remember the number exactly. Because it's a little bit off the beaten path. Well, it's just north.

11:27It's only not even a kilometer north of Torbert. Oh, it's not that far. No, not that far. Oh, okay. But it's at a different angle. it's coming in at an almost right angle to the main structural corridor that makes up the Kitsult Valley. So you have a bunch of things that are kind of just off this main structural corridor. And one of the things that we tagged last year in drilling Wolf down dip is we drilled on the other side of the central structural zone and found a mineralization that kind of looked like Torbert. And so we've been drilling that more this year. We call it the 470 zone. It's actually because it was tagged by hole 470.

12:08So we've been tracing that back from Wolf back down towards this nexus between Torbrit and Northstar. And the structure is there, and we're seeing visually good mineralization. It's a big, wide zone, so there's lots of disseminated lower-grade material, but then we want to focus on this high-grade stuff. So that whole nexus is kind of coming together. We just refer to that as the Dolly Varden zone.

12:40Trevor Hall: So, Rick, you and I have been chatting for a number of years. I always think of you more of a miner than an explorer. I don't know if that's fair. But don't be offended if you don't like it. But, you know, with Moncho, Lucky Shot, and I guess even Johnson Track, the kit salt seems i don't say overwhelmingly but at least more complicated so as a miner are you starting to put pictures in your head of what an actual mine would look like at kit salt and how what do you have to do to kind of mitigate some of those geological complications yeah so um Kitsal, it's definitely, there's more deposits. So, and like I said, one of the things we saw was sort of, you know, the synergy, the fact that Torbrett and Northstar are actually the same ore body.

13:34They just hadn't been drilled and connected. So I'm expecting those to connect. That will help. That'll help. And then this 470 zone is coming right into the middle of that. So if that can connect the Torbrett-Northstar area with Wolf, then now you've got a nice synergy. And Kitsall is in between, actually. Kitsall is between Wolf and Northside. It's another one of these sort of side structures that comes in. So there's lots more drilling to do here. But what we want to do is now transition our thinking to just doing exploration to putting a mine plan together, a preliminary mine plan. So we'll complete the MRE in, call it March-April time frame, get all the assays back by the end of the year, get QAQC finalized, get the model updated.

14:22And then we'll take that and do an initial assessment of PEA. So that won't be done until maybe this time next year or October time frame, something like that. But we want to start transitioning. How do we make this into a mine? We see two areas here. You've got, again, the Dolly Varden area that's silver rich. Not a lot of gold there, some base metals. And then the homestake area that's gold and gold silver. So, yeah, we'll start to think about how to develop these. Is it sequential? Do you do them both at the same time? Where does each go? That's what we want to put together in this initial assessment that we'll complete, like I say, roughly this time next year.

15:05Trevor Hall: Okay. You're guiding about$45 million in U.S. in cash by year end, so obviously pretty well set up for 2027. you don't see any reason to go back and finance or anything like that. Yeah, we're pretty good. That cash flow from Montreux is, you know, look, we're definitely seeing costs go up as we talked about. So we can always take our foot off the accelerator a little bit. You know, we don't want to, I don't want to, I like the fact that we only have 33 million shares outstanding and don't have to raise money to continue to advance our projects. We want to do everything we can to get Lucky Shot into production as quickly as we can.

15:47I expect that's going to be in the second half of 2028. So we get the MRE done, get the feasibility study done next year, and maybe start to get the underground development. At Lucky Shot, we need a secondary egress, because you have to have two entry and exit points to an operating mine. Exploration, you don't, but when you're operating a mine, you do. and so we need to get that done and we need to stop development. So I think it's roughly$50 million to do that work between 27 and 28. But now you're generating another 40 to 50 ,000 ounces of gold and I think our own sustaining costs can be in the$2 ,000 neighborhood.

16:27So now you're generating another$80 to$100 million of free cash. That's the business model we want to pursue with this DSO approach. It's not to say we're going to do DSO forever, but a junior needs to make money because you don't want to rely on the markets because if you do, it never turns out well for shareholders.

16:46Trevor Hall: Real cash flow. Real cash flow. All right. Let's leave it at that. Good to see you, Rick. Thanks so much for your time. Contenco Silver and Gold again trades on the NYSE American and the TSI with the symbol CTGO. And I'll spend some time with you this week up in Frankfurt. See you then. Good to see you then. The information presented should not be considered investment advice. Mining Stock Daily and its affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.