Contango Converts Remaining Hedge Contracts into Debt

Contango Silver & Gold Inc. has completed the final phase of its hedge settlement strategy by converting the remaining 15,000 ounces of hedged gold into debt. This amendment increases the total principal of the company's credit facility from $12.6 million to $46.3 million. The interest rate on the facility has been reduced to approximately 7.40% from 8.9%, with no restructuring fee applied.

To facilitate the conversion, the company purchased 15,000 put contracts at a $3,100/oz strike price for $715,000, an amount added to the debt principal. Repayment is scheduled in four tranches: $1 million in September 2026, $1 million in December 2026, $15.5 million in March 2027, and $28.8 million in June 2027. Management states the move removes the cash flow ceiling on gold production, delivering full unhedged exposure to shareholders while retaining the flexibility to prepay.

This transaction follows the June 29 settlement of Lucky Shot milestone payments and the June 23 announcement regarding the early settlement of 2026 hedge obligations.

Contango Silver & Gold Inc. (CTGO) executed a strategic financial optimization consistent with the plan outlined in its June 23 update, a move the market had already anticipated. The company removed the hedge ceiling, a change that materially improves operating leverage in the event of rising gold prices and aligns with management’s stated bullish macro outlook. To mitigate the risk of a sudden gold price collapse while preserving upside potential, the company included $3,100/oz put options.

Although the transaction resulted in a substantial increase in debt on paper, the company maintains a strong net cash balance. This position is supported by $97.5 million in cash as of Q1 2026, which fully offsets the debt increase. The repayment schedule is back-loaded, with $28.8 million due in June 2027. This timeline aligns with expected cash distributions from the Peak Gold JV and Manh Choh production, thereby reducing near-term refinancing risk.

Contango Silver & Gold Inc. operates a portfolio of four North American projects focused on gold and silver. The company’s flagship asset is the Manh Choh mine in Alaska, operated through a 30% interest in the Peak Gold JV. This operation utilizes a Direct Ship Ore (DSO) model, which simplified operations and accelerated cash flow generation.

The company holds 100% ownership of the Lucky Shot project in Alaska, the Johnson Tract project in Alaska, and the Kitsault Valley project in British Columbia. Management’s strategy relies on generating cash flow from Manh Choh to fund the aggressive advancement and feasibility studies of its 100%-owned exploration and development assets.