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Contango Silver & Gold: Low-Capex Direct-Ship Ore Model Yields Big Returns

CEO.CA Oct 1, 2026 13:52

Summary

President Shawn Khunkhun says Manh Choh's high-grade output self-funds growth, generating roughly $100 million in yearly free cash flow at his $3,700 budgeted gold price.

Manh Choh's 2027 guidance: 75,000-80,000 ounces at $1,213-$1,300 cash costs (the direct cost to mine an ounce) as mining shifts into the richer South Pit.

The guest argues 2025's rally - gold up 70%, silver 200% - and supportive governments make this mining's best financing market in a century.

Management frames the portfolio at about 10 grams per tonne (metal content per tonne), with the new KB estimate lifting indicated silver ounces 93%.

Direct shipping ore (DSO - ore sold without on-site processing) needs infrastructure and simple permitting; the guest credits it for Manh Choh's two-and-a-half-year feasibility-to-production timeline.

Key points on Agnico Eagle Mines

  • Khunkhun cites Agnico Eagle as an example of sector leadership doing great work in the north, which he says trickles down as rising major valuations drive acquisitions and growing scarcity among juniors.
  • He counts Agnico among the three super majors (alongside Newmont and Barrick) that consolidation created during the post-2013 metals depression, a shakeout he says left a vacuum in the mid-tier.

Key points on Barrick Mining

  • Khunkhun names Barrick as one of the three super majors formed through mega-merger consolidation during the post-2013 metals depression, a period he says emptied the mid-tier space that Contango now aims to fill.

Key points on Kinross Gold

  • Kinross, Contango's partner at the Manh Choh mine, is guiding 2027 cash costs of $1,213-$1,300 per ounce now that mining has successfully transitioned from the North Pit to the higher-grade South Pit, according to Khunkhun.

Key points on Newmont

  • Khunkhun names Newmont as one of the three super majors created by the consolidation wave during the post-2013 metals depression, which he says left the mid-tier space vacant.

Key points on Contango Ore Inc

  • Khunkhun says Manh Choh generates about $100 million a year of free cash flow in USD at the company's $3,700/oz budgeted gold price, and that 2027 guidance should lift that to about $200 million.
  • He guides to cash costs around $2,000/oz for 2026, dropping to a Kinross-guided $1,213-$1,300/oz in 2027, with production of 75,000-80,000 ounces helped by completed pre-stripping and batch campaigning of ore after the move to the South Pit.
  • Formed this year (2026) through the merger of Contango Ore and Dolly Varden Silver, the company is building a self-funded mid-tier precious metals producer on Alaska and British Columbia assets with only about 33.5 million shares outstanding.
  • A new mineral resource estimate released in late September 2026 shows a 93% increase in indicated ounces at the KB project, now 150 million-plus silver-equivalent ounces and 90% precious metals, which Khunkhun calls the largest Canadian silver project at over 83 million ounces of silver.
  • Khunkhun highlights accretive M&A — Johnson Trailing, with a claimed $600 million NPV, was acquired for $37 million in shares — and a direct shipping ore model that took Manh Choh from feasibility to production in two and a half years, with the development pipeline 100%-owned.

Key points on Novagold Resources

  • Khunkhun credits Contango CEO Rick Van Nieuwenhuyse with building Novagold from scratch into one of his billion-dollar Alaska businesses, citing it as evidence that investors must bet on the people.

Mark Carney's takeaways

  • Top takeaway Khunkhun says the Carney administration is delivering more than talk, pointing to new legislation that lets companies expense some capital costs sooner and strengthens incentives for explorers.
  • He references the promises made at Carney's recent investment summit in Toronto, where mining projects were front and center, as a sign more capital should reach the exploration sector.

Rick Van Nieuwenhuyse's takeaways

  • Top takeaway According to Khunkhun, Rick Van Nieuwenhuyse co-founded Contango Silver and Gold with him this year to build a mid-tier precious metals company differentiated by tier-1 jurisdictions in Alaska and British Columbia and a self-funded model.
  • Khunkhun credits the Contango CEO with building multiple billion-dollar businesses from scratch in Alaska, naming Novagold and Trilogy, over a track record he puts at more than 40 years.
  • Presented as proof of Contango's bet-on-the-people thesis: a demonstrated ability to replenish depleting mineral inventory through low-cost discovery and accretive M&A in ways that protect shareholders.

Shawn Khunkhun's takeaways

  • Top takeaway Argues that supportive governments, supply deficits and demand make this probably the greatest time to be in the mining industry, better even than the 2009-2010 mine finance boom.
  • Points to 2025 as the year the bull case showed up in results: a 200% rise in the GDXJ, gold up 70% and silver up 200%, with investors now placing bigger bets and more money being raised.
  • Explains his silver conviction: the September 2010 to April 2011 move from about $20 to $49 paid him more than a decade of building gold companies, so he reweighted into silver in 2018-19 and sees real scarcity with only about 10 primary silver producers of scale, some deriving only around 28% of revenue from silver.
  • Track record cited on the show: he grew Dolly Varden from roughly a $20 million market cap to several hundred million before this year's merger, and says Contango bought Johnson Trailing, with a $600 million NPV, for $37 million in shares.
  • Runs a capital-discipline story he calls unique at the conference: about 33.5 million shares outstanding, self-funded by Manh Choh cash flow (about $100 million a year at his $3,700/oz budget price, about $200 million on 2027 guidance) to develop a 100%-owned pipeline.