Why Silver and Gold Are Headed Back to All-Time Highs | Shawn Khunkhun - Contango Silver & Gold
Summary
Contango retired all its gold hedges, which President Shawn Khunkhun presents as conviction that gold is bottoming even if silver retests $50 to $55.
The direct shipping ore model (DSO — selling high-grade rock to outside mills) skips new plants and tailings permitting, cutting capital and timelines.
Khunkhun argues the merger discount is fading: gold peers average about 0.7 NAV (net asset value), and silver producers can trade at twice that.
A Kitsault Valley resource estimate arrives in July, switched to S-K 1300 reporting after the merger, with 40,000 metres of drilling feeding catalysts.
Khunkhun guides 75,000-80,000 ounces in 2027 at a $1,200-1,300 AISC (All-In Sustaining Cost — full production cost per ounce), implying $200 million potential free cash flow.
Key points on Hecla Mining Company
- Khunkhun says Hecla, not First Majestic or Pan American, is the right comparison for Contango because its projects sit in the US and Canada.
- He frames Hecla as the mid-tier producer Contango aims to resemble, noting Contango traded near a $600 million valuation at the time of the interview versus roughly $10 billion for Hecla.
Key points on Contango Ore Inc
- Khunkhun argues the merged Contango can rerate from roughly 0.3x NAV to the 0.7x gold-peer average, and potentially to 2x NAV once its silver project starts production in about three years.
- He projects 2027 production of 75,000-80,000 ounces with potential free cash flow near $200 million, and says he wants the share price 100-200% above its level at the July 2026 interview.
- The company uses a direct shipping model, sending high-grade ore to underutilized mills instead of building processing plants or permitting tailings, which he says means less capital and faster timelines to production.
- Catalysts he cites include an S-K 1300 resource estimate for Kitsault Valley due in July 2026, 20,000 of 40,000 planned drill meters completed ahead of schedule and on budget, and a new KM discovery at Lucky Shot.
- He describes the business as producing and self-funded with $67 million going into its projects, and says Contango retired all its hedges out of conviction that gold was in a bottoming range as of the interview.
Steve Hyland's takeaways
- Top takeaway Hyland anchors the interview on Contango's valuation discount, citing the company deck's point that it trades at about half the peer-average price-to-NAV, and asks how the gap closes.
- He presses for the delayed Kitsault Valley resource update, drawing out the July 2026 S-K 1300 timing as a Deep Dive exclusive, and asks Khunkhun to define what success looks like a year later.
Shawn Khunkhun's takeaways
- Top takeaway Khunkhun expects gold and silver to return to all-time highs but allows further downside first, watching $55 then $50 for silver and citing talk of a $3,600 gold bottom, and says Contango retired all its hedges to show conviction the bottom is in.
- He argues Contango can rerate from about 0.3x NAV to the 0.7x gold-peer average and potentially to 2x as a silver producer, since high-grade deposits in safe jurisdictions trade at the top of the curve.
- He projects a strong 2027 with 75,000-80,000 ounces of production and up to $200 million of free cash flow, and wants the share price 100-200% above its level at the interview.
- He expects the July 2026 S-K 1300 and assay results through Christmas 2026 to drive the stock, saying infill drilling typically yields robust intercepts and the Lucky Shot KM discovery could unlock more mineralization.
- He presents the prior year as proof of execution, saying the DSO step change he predicted led to the billion-dollar merger, and sees accretive M&A in processing facilities and other assets if the valuation rerates.