Contango ORE raises $50M to buy back $45M gold hedges, retain downside protection with puts

Contango moves to unwind gold hedges to free future upside

Contango ORE is using proceeds from a recently closed underwritten offering to buy back a large portion of its existing gold hedge book, a move the company says is intended to restore upside exposure for future production while maintaining limited downside protection. The NYSE‑listed gold explorer and developer allocates about $45 million of net proceeds to repurchase gold hedge contracts and roughly $700,000 to acquire gold put options, with remaining funds reserved for general corporate purposes and working capital. Management frames the transactions as a hedge-unwinding strategy that preserves some downside cover while removing constraints that could limit future revenue as projects advance.

The decision to retire hedges comes as Contango advances its Alaska-focused portfolio and seeks to align its financial structure with project development timelines. Unwinding hedges typically reduces counterparty commitments and can improve the attractiveness of future cash flows to partners or lenders; for Contango, that could affect joint‑venture dynamics at the Manh Choh project and near‑term funding flexibility. The purchase of put contracts is designed to retain protection against sharp downside moves in gold while allowing the company and its partners to benefit from rising metal prices if exploration and permitting progress as planned.

Operationally, the move is likely to influence Contango’s capital planning and permitting activities by clarifying expected revenue profiles and reducing the administrative burden of managing hedges. Analysts and industry participants view such hedge buybacks by explorers and development-stage companies as a step toward capturing resource upside when project timelines and market conditions make foregoing fixed-price sales more attractive. Contango positions the transaction as balancing risk management with a desire to maximize shareholder value from future production.

Offering structure and parties

Contango closes the sale of 1,678,206 common shares at $24.96 per share to two institutional investors and concurrently offers pre‑funded warrants to purchase 325,000 shares at $24.95 each. The offering generates aggregate gross proceeds of about $50 million before discounts, with Canaccord Genuity acting as sole bookrunner and Cantor, National Bank of Canada Capital Markets and ATB Cormark as co‑managers. The securities are sold under a shelf registration statement on Form S‑3 declared effective Nov. 27, 2024.

Company profile and asset context

Contango explores for and develops gold and associated minerals in Alaska and holds a 30% interest in Peak Gold LLC, which leases roughly 675,000 acres for the Manh Choh project; the remaining 70% is owned by KG Mining (Alaska) Inc., an indirect subsidiary of Kinross. The company emphasizes that the press release does not constitute an offer to sell or solicitation to buy the securities.