Have you followed gold lately?
It’s not exactly trading how you would expect.
It rose over the past couple of weeks, but it is supposed to be an inflation hedge.
Gold is trading just 4% above its peak in 2011.
And it is trading under its peak in 2020, 2021 and even earlier in 2023.
By the way, gold is not just an inflation hedge, it’s also a store of value and safe haven asset when times are tough.
I think times are about to get much tougher and the way gold has been winding up for the past three years, has me as bullish as ever on gold.
Let’s take a look…
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Below is a 10 year chart on gold prices.
A few things stand out. First, gold is rarely stagnant. Prices soared in the early 2000s, had a hiccup during the market crash, then rocketed up through 2011.
Prices tumble into 2016 before making a round bottom and hitting a peak in 2020.
Now, we are up to date as prices have simply traded sideways for three years.
I don’t expect that to be the case much longer.
Gold prices, in my opinion, are going to reupt in the years and months ahead.
There are going to be too many issues popping up for the safe haven asset not to see a surge in demand and storage.
Inflation remains high and the economy is about to kick the bucket.
Gold is one of the best plays in the market right now.
And I have a speculative way you can play it.
Read below for my analysis on a top gold stock that has major catalysts in the coming years that will help propel the stock.
Contango Ore, Inc. (CTGO): Digging For Gold In The Land Of Opportunity
Contango Ore, Inc. (CTGO), a company that’s been on the radar for investors with a taste for adventure. This Alaska-based mineral exploration and mine development firm, with its intriguing journey and promising prospects, could very well be the hidden gem you’ve been looking for.
Shares in the stock recently declined 50% in a matter of weeks. Even with this decline, the stock is up almost 20% over the last three years, on par with the S&P 500.
In my analysis today, we are going to look at the fundamental picture and future catalyst that will help propel Contango’s stock to potentially better returns in the months and years ahead.
A GOLDEN BEGINNING
Contango Ore’s story began in 2010 when Chairman Brad Juneau stumbled upon the mineral potential of the Tetlin property while exploring for natural gas in eastern Alaska. What started as a simple discovery turned into a grand vision – a vision that’s now set to become a reality with the Manh Choh mine’s impending completion.
The highlight of this vision is the Peak Gold deposits, which have grown to boast over 1 million ounces of high-grade gold. This remarkable expansion reflects Contango Ore’s transformation and journey toward becoming a gold producer. But there’s more to this tale.
Rick Van Nieuwenhuyse, a seasoned industry veteran, joined the company as President and CEO. He brought not only experience but also a vision to partner with Kinross Gold Corp. for the development of the Manh Choh mine. This strategic alliance involves shipping the high-grade ore to Kinross’ Fort Knox Mine near Fairbanks, Alaska, for processing.
Contango Ore holds a 30% interest in the Peak Gold Joint Venture, which is focused on developing Manh Choh. The company is poised to receive around 65,000 ounces of gold per year from the mine once it kicks into operation, expected next year.
BEYOND MANH CHOH: DIVERSIFICATION AND EXPLORATION
However, Contango Ore’s ambitions extend beyond Manh Choh. The company is actively advancing the high-grade Lucky Shot gold project in Southcentral Alaska. This development will further bolster the annual gold production when the project reaches the mining stage.
Moreover, Contango Ore owns several other gold, silver, and copper exploration projects in Alaska. This diversified portfolio underscores its commitment to exploring new opportunities both within and beyond the Far North State.
RUSSELL INDEXES INCLUSION: A MILESTONE FOR RECOGNITION
In a significant development, Contango Ore is set to join the broad-market Russell 3000 and Russell Microcap indexes. The inclusion signifies the company’s accomplishments and the awareness it’s building within the market. These indexes are widely used by investment managers and institutional investors, adding a layer of recognition to the company’s growth and progress.
GROWTH AND POTENTIAL: THE GOLD RUSH CONTINUES
Contango Ore’s expansion and diversification efforts are not without purpose. The Manh Choh mine, set to produce approximately 1 million gold-equivalent ounces over an initial 4.5 years of mining, is a testament to the company’s vision. It’s expected to pour its first gold bar in the second half of 2024. That’s the catalyst for growth and brings us closer to the company reaching its potential.
Despite not having any revenues yet and reporting consistent net losses because of that fact, Earnings Per Share (EPS) is expected to be positive in 2025. The growth estimate in EPS is driven by the anticipation of generating revenues shortly after it is in production.
The Lucky Shot project, located in the heart of Alaska, is blessed with a rich history of gold production, and Contango Ore aims to resurrect it. The company has completed exploration programs, drilling dozens of holes to understand the project’s potential better. This endeavor revealed impressive resources, both indicated and inferred, setting the stage for mining plans.
THE POTENTIAL
Lucky Shot, with its pre-World War II-era underground mines – Colman, Lucky Shot, and War Baby – witnessed remarkable gold production. These mines generated 252,000 ounces of gold from 169,000 tons of ore, averaging around 40 grams per metric ton. And Contango Ore is resurrecting this historic treasure.
The recent resource estimate for Lucky Shot is nothing short of thrilling. Indicated resources stand at 105,620 ounces of gold, while inferred resources show an additional 25,110 ounces. These impressive numbers represent a fantastic start on the road to mining.
The company isn’t stopping there. Contango Ore is planning an extensive drill program to expand and upgrade these resources. With a focus on both underground and surface drilling, the company is poised to unveil the true potential of Lucky Shot.
The road ahead also involves enhancing the gold grades within the resource. The company is working on a less conservative capping strategy that is expected to unleash even higher grades and increase the overall gold content.
A PROMISING PARTNERSHIP: KINROSS AND MANH CHOH
While Contango Ore pushes forward with the Lucky Shot project, it’s crucial to remember that its flagship venture, the Manh Choh mine, is on track. Operating as part of the Peak Gold Joint Venture, where Kinross Gold Corp. holds a 70% stake, Manh Choh is set to produce an impressive million gold-equivalent ounces over 4.5 years.
Pre-production and construction are proceeding as planned, and mining operations are set to commence by the second half of 2024. The mine’s reserves promise a significant payload of gold and silver.
A BALANCED OUTLOOK: RISKS AND REWARDS
As with any investment, there are risks to consider. Contango Ore’s financial reports indicate an increase in net loss, largely due to higher pre-production costs as the company has yet to generate revenues. However, these costs are a natural part of developing and constructing a mine, and the potential returns from successful mining operations are significant.
Furthermore, the company’s stock performance may be influenced by market conditions and global factors affecting the precious metals industry. The current global economic climate, including fluctuating gold prices, also plays a role in the risks and rewards associated with investing in Contango Ore.
IN CLOSING: THE GOLD STANDARD FOR INVESTMENT
In conclusion, Contango Ore, Inc. (CTGO) stands as a promising and dynamic company with a compelling story of discovery, development, and expansion. Its foray into gold production at the Manh Choh mine and the resurgence of the Lucky Shot project offer investors a glimpse into its growth potential.
Contango Ore’s inclusion in the Russell 3000 and Russell Microcap indexes underscores its journey towards recognition. Its vision, leadership, and diversified ventures are the driving forces behind its upward trajectory.
While there are risks, the potential rewards are substantial. As a long-term investment, Contango Ore has the potential to deliver substantial value to shareholders as it continues to unearth the wealth of Alaska’s wilderness.
That’s all for today.
If you enjoyed this article and would like to see more content like this, let me know. You can reach me at info@bankitortankit.com.
Let’s get it!
Chad Shoop, CMT
Editor, Bank It or Tank It ELITE