Plus: Contango Ore | Onyx Gold
IVN IVPAF shares this week are marking all-time (12-year) closing highs. Below.*
Contango Ore: A CTGO underwritten financing is priced approx. 24 percent below Friday’s close at $19 USD.
The Alaska miner’s stock Monday-today lost more than $7 USD to $19.60. The $30 million raise puts Contango on a well capitalized road to gold production and further exploration at two projects.
I asked about the financing this morning for the tightly held stock. Rick Van Nieuwenhuyse listed the stock on NYSE-AMEX in November 2021.
The “underwritten” share sale will get Contango $30.4 million before fees and such. Maxim Group and Freedom Capital, the two bookrunners, or underwriters, could purchase another 240,000 shares (approx. $4.5 million USD). That is a plus.
Background: this is to fund Contango’s 30% of a 70-30 Kinross partnership for what the two are calling Peak Gold, which hopes in 2024 to start mining at Alaska’s Manh Choh project on Tetlin native lands. (Also to continue exploration drilling at Contsngo’s Lucky Shot project, which I visited a year ago.) Press release in this link.
A bank agreement required $32 million, “which was well broadcast,” for the Peak Gold venture, Rick says. See: May 2023 SK-1300 Technical Report filing for Manh Choh. Also see: $65 million (and as much as $70 million) credit facility from two lenders.
“Painful discount to be sure, but this gets us a clear path to production at Manh Choh and the serious cash flows from that high quality asset; a significant in-fill and expansion drill program at Lucky Shot with lots of news flow all winter long; and wide distribution and liquidity of our stock.” More background here.
Rick (CEO, founder) adds: “Maxim and Freedom both have very large retail reach and that is exactly what we wanted. CTGO shares with this financing will have about 10 million outstanding.
“Assuming the (‘bookrunners’) greenshoe gets exercised and brings us a total of $35 million, which I am confident it will, we will have 9.64 million shares outstanding. No warrant with this financing,” he said.
Rick and Contango likely are relieved to get cash before what some are saying will be an onslaught of small-miner financings this summer and autumn — unless, that is, commodity markets and mining equities resume a long-anticipated up-cycle. (Please see The Calandra Report/TCR June 20, 2023 FINANCING BLOODBATH AHEAD?)
I will be holding my CTGO shares, looking for that 2024 cash flow from gold sales at Manh Choh, which has its own web site. Also, and this is speculating, perhaps another pact with KGC Kinross Gold to process Lucky Shot ore at one of that miner’s Alaska plants. Fort Knox? Manh Choh? I am down about $4,000 with CTGO with approx. 15 months or more of ownership.
Let’s keep an eye on CTGO, which is exchanging hands in after-market trading Monday at $18.87 USD. At that price, the shares are a few ticks below the offering price and look attractive.
ONYX GOLD ONYX: This is Alaska and Yukon miner Highgold Mining‘s HIGH HGGOF heralded Ontario and Yukon spinoff, with ONYX Canada trading starting just now.
We wrote about this a year ago after visiting HIGH’s Alaska project. Darwin Green, CEO, saw the attraction of Snowline Gold‘s SGD SNWGF exploration success in Yukon’s Selwyn Basin. I happily own Snowline Gold’s shares.
“After first talking to you a year ago about the significance of the Snowline discovery and our land position in this emerging new district, Onyx Gold is launched. We look forward to providing you updates on Onyx as we roll into a very active 6-months of drilling in Yukon and Ontario,” Darwin says. See release.
Darwin, with Onyx having raised approx. $8 million CAD, is just back from Yukon, “and am fired up to put the first ever holes into our gold soil anomaly at King Tut (near Snowline’s Valley deposits).” The shares on Day 1 have about 100,000 changing hands at 48 cents CAD.
The Ontario project is in the Timmins mining camp. I no longer own a small number of Highgold shares and thus no ONYX.
TCRs, I have been tightening the share roster here at home this summer, with 3 of these four losing me money: Galiano Gold GAU, Elemental Altus Royalties ELE, Ridgeline Minerals RDG and Vision Lithium VLI — with small losses and ELE and RDG held for well more than a year. I will continue to track these and HIGH/ONYX.
I have been increasing stakes in Ivanhoe Mines (below), and two inflation-tipped U.S. bond funds, STIP and TIPX.
* Copper miner Ivanhoe Mines shares IVN IVPAF Wednesday successfully challenged a $12.90 CAD high mark earlier in the week. The stock is at all-time highs [Wednesday]. $13.38. CAD. The copper price is off 0.3%.
The $16 billion USD of public shares are outpacing many copper-company stocks (Global X Copper Mines COPX).
Ivanhoe execs next week (August 3, 2023) will discuss a quarterly update.
Recall, as reported here July 19, Ivanhoe spokesman Matthew Keevil explaining how “flash smelting” of copper concentrate in DRC Congo’s Kamoa-Kakula plant likely will lead to reduced shipping costs and more profit margin.
“It allows the roasting and smelting of sulfide concentrates in a single furnace, so there is a bit of variance on the capex side, though we are building the largest single furnace (manufacturer) Outotec has ever made, so it is still around $1 billion in capex for the complex,” he said.
$16 Billion Question: When $20 Billion?
Entire The Calandra Report/TCR on this development is here.
IVN IVPAF continues to be our largest mining stake at approx. 80,000 shares.
— Thom Calandra
Thom Calandra is a writer and an investor. Research and material are meant as editorial opinion. He is not a professional investment adviser. Please do not consider his reporting as a recommendation to buy or sell securities.