Contango ORE confirms Kinross’ cost guidance for Manh Choh project in Alaska
Production is expected to commence at Manh Choh in the second half of 2024.
Alaska gold explorer Contango ORE (NYSE American: CTGO) has completed a technical report summary on the Manh Choh project, confirming the results of the feasibility study (FS) and subsequent updates prepared by KG Mining (Alaska), its joint venture partner and an indirect subsidiary of Kinross Gold.
Contango has a 30% interest in the JV, which is leasing approximately 675,000 acres of exploration and development from the Tetlin Tribe through future production royalties. The lease is also subject to a 3% net smelter royalty in favor of Royal Gold, the JV’s former partner prior to Kinross.
Commenting on the technical report summary, CEO Rick Van Nieuwenhuyse said: “The results of the report are consistent with prior guidance including the estimated all-in sustaining cost (AISC) of $1,116 per gold equivalent ounce and the initial capital costs of $64.6 million for Contango’s 30% portion.”
The Manh Choh project is represented by the Peak gold deposit, located in the northern part of the Tetlin lease. A well-defined skarn-type mineral deposit, it contains 1.3 million ounces of measured and indicated resources averaging 4 g/t gold.
In June 2022, Contango announced that a construction decision was made by the Kinross board after the Manh Choh project FS was released ahead of schedule. The FS outlined a plan to batch process the high-grade ore of approximately 8 g/t through Kinross’ Fort Knox mill.
By utilizing the existing facilities at Fort Knox, the Manh Choh project could proceed without having to permit, capitalize, and construct a mill or tailings facilities, the FS report showed. The project has received the federal permits needed for road construction, and early work construction is already underway.
Earlier this year, Contango arranged a $70 million senior secured loan facility with ING Capital and Macquarie to fund its portion of the pre-production construction and operating expenditures for the JV.
Based on Kinross’ updated resource model, Contango would have an initial reserve of approximately 300,000 ounces gold and over half a million ounces of silver, net its 30% ownership.
Production is expected to commence at Manh Choh in the second half of 2024, with a mine plan that consists of two small open pits that will be mined concurrently over 4.5 years.