Contango Silver & Gold: Unhedged and Rebuilt for the Gold and Silver Upside
Q2 marks the first full quarter with Kitsault Valley integrated and the hedges behind them—management is now fully exposed to the metal's rally.
CTGO · Earnings Call · 2026-08-14
A Clean Slate: The Hedge Book Is Gone
The biggest change at Contango this quarter is not in the production numbers but in the positioning. CEO Rick Van Nieuwenhuyse opened the call by emphasizing that the company is finally out from under its hedge book: “we're out from underneath the hedges. We've got a clear exposure for our shareholders to the upside in the gold price” — Rick Van Nieuwenhuyse, CEO · 2026-08-14. This is a strategic inflection. A year ago, the hedge book still loomed—the CFO described ending Q1 2025 with 86,000 ounces on the books and ~75,000 effective after carry trades: “we finished the quarter with technically 86,000. But when you consider the carry trade, the hedge balance is just below 75,000” — Mike Clark, Chief Financial Officer · 2025-05-15. By June 2026, not only had the hedges expired (with puts providing a floor at $3,100), but the company has also integrated the Dolly Varden silver asset and renamed itself to reflect its twin exposure.
gold is king, and we're unhedged. So we're going to see that upside delivered to our shareholders
Manh Choh Delivers, Cash Flows to Come
The 30% stake in the Manh Choh mine produced ~8,900 ounces in Q2 at an average spot price of $4,328, with cash costs of $2,665 (AISC $2,830), well above the full-year guidance of $1,900–2,000. The CFO explained the gap is entirely a function of pre-stripping and lower-grade North pit ore: “you spent the whole first 6 months of the year spending money on that while also mining lower grades” — J. Clark, CFO · 2026-08-14. As the South pit grades come through, he projects Q3/Q4 production of ~12k ounces each, pushing the full-year to ~41k ounces, within guidance. More importantly, the JV has started to distribute cash: “about $36 million in the back half of this year from distributions” — J. Clark, CFO · 2026-08-14 at $3,700 gold, with upside to $4,400. This cash is what funds the three growth projects while keeping the balance sheet intact.
The fundamentals confirm the shift. Net cash of $53M at the end of Q2 (versus a net debt position in 2024) reflects the deleveraging and cash balance build. The CFO expects cash to dip to a low in Q1 2027 before ramping as Manh Choh hits its best grades.
Kitsault Valley and the Silver Story
The integration of Dolly Varden into the Kitsault Valley district is the centerpiece of the company's future. The management team now controls a silver deposit that makes up 90% of the contained value in the Torbrit, Wolf, and Dolly Varden veins, with 5 million ounces of silver targeted within five years. The drill program (>35,000 meters completed by end of June) is running ahead of budget, and the team is using ore sorters to upgrade grades and reduce haulage—a low-capital route to a direct-shipping-ore mine at the high-grade gold Lucky Shot project. On the silver side, the company is positioning itself as a rare pure-play silver producer in a market where silver prices have surged ~70% year-over-year.
Lucky Shot and Johnson Tract: Catalysts Ahead
The company recently closed the purchase of mineral claims around Lucky Shot, eliminating a 2% NSR and consolidating the district. Drilling continues with high-grade intercepts (972 g/t gold), and a feasibility study is targeted for 2027. Johnson Tract is advancing under FAST-41 permitting, with road and bridge construction underway and coming in under budget. Management maintains that all three projects can be funded from operating cash flow without dilution, given the existing $89M in cash and cash distributions from the JV.
The market hasn't fully priced this turnaround—the stock is down ~14% over the past 90 days and ~26% from its May high, despite the de-hedging and operational progress. The company is generating strong free cash flow, has a fortress-like balance sheet, and now offers pure leverage to gold (and silver) prices. As CEO Rick Van Nieuwenhuyse put it, "we're in a great spot." The next few months will bring a steady stream of drill results and project updates—a catalyst-rich period for a micro-cap that has largely been overlooked.