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The anticipated rise in AISC, says Contango, relates to recent weight restrictions placed on the bridge used to transport the Manh Choh ore, as well as higher moisture content in the Manh Choh ore, limiting the overall amount of ore being transported annually by approximately 20%.
Rising processing costs are also contributing to the higher AISC projections, it adds.
Contango ORE’s stock plunged 22.3% to $13.95 by 11:30 on Friday, for a market capitalization of $171.2 million. Earlier, it had fallen to $13.56, the lowest it traded in nearly four years.
“While we are disappointed with these new weight restrictions impacting Manh Choh trucking operations, which has an impact on AISC, the Manh Choh project is expected to be very profitable over its current 4-to-5-year mine life, generating significant free cash flow to Contango,” commented CEO Rick Van Nieuwenhuyse.
At current hauling rates, and at an assumed spot gold price of $2,500/oz., Contango projects cash distributions from the Peak Gold JV going into its account next year to be approximately $50 million. This is based on anticipated gold production of 60,000 oz., in line with expectations.
For 2024, the company anticipates its share of gold production from the Manh Choh mine to be 38,500 oz., following a successful first pour in July. Contango and Kinross first formed the Peak Gold JV in 2020. In 2023, mining operations began, with ore transported to Kinross’ Fort Knox facilities for processing.
Together with Kinross’ share, it is expected that the Manh Choh mine will deliver approximately 220,000 oz. annually. The deposit has a defined resource of 9.2 million tonnes in the measured and indicated category averaging 4.1 g/t gold and 14 g/t silver, for 1.2 million oz. of contained gold and 4.2 million oz. contained silver.
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