The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
North of 60 Mining News - September 9, 2024
Just two months after pouring the first gold from the Manh Choh Mine, a second batch of ore is being fed through the Kinross Alaska Mill at Fort Knox.
Contango Ore has received federal permits needed to build a road that connects the Johnson Tract camp and the proposed portal at the JT gold deposit.
After receiving roughly $32 million of gold and silver in August from the first direct shipping ore processed under its hybrid royalty model, Contango Ore Inc. reports that Kinross Gold Corp. is processing the second batch of high-grade ore from Manh Choh through the mill at its Fort Knox Mine north of Fairbanks, Alaska.
"It is great to see the start of the second campaign of Manh Choh ore going through the Fort Knox mill. Our representatives are on site to monitor the progress," said Contango Ore President and CEO Rick Van Nieuwenhuyse.
During the first campaign, which was processed from early July through early August, approximately 54,000 ounces of gold and 11,600 oz of silver were recovered from ore delivered from Manh Choh, a satellite mine operated under a joint venture between Kinross (70%) and Contango (30%).
Contango's 30% share of production from the first campaign came to roughly 16,200 oz of gold and 3,500 oz of silver. The company anticipates that a total of roughly 33,000 oz of gold will be recovered from the second campaign, which began on Aug. 27 and is expected to continue into late September.
"We expect Campaign #2 to produce a target of 10,000 ounces of gold for Contango's 30% share of production," said Van Nieuwenhuyse.
Ore continues to be trucked some 250 miles from Manh Choh to Fort Knox, and Kinross plans to process a third batch before the end of the year.
"A third campaign of similar size delivering an estimated 10,000 gold ounces for Contango's account is currently planned to be processed in November, bringing our total gold production guidance for 2024 to approximately 36,000 ounces," said Van Nieuwenhuyse.
The precious metals being delivered from Manh Choh ore are generating revenue to fund expansion of Contango's hybrid royalty model, a unique strategy to directly ship ore from high-quality gold, silver, and copper deposits to existing mills for processing.
This model minimizes the capital costs, environmental footprint, and permitting risks associated with mine development.
The Lucky Shot and Johnson Tract projects in Southcentral Alaska are slated to host the next mines that will directly ship ore to third-party mills for processing under Contango's innovative business model.
"With the Manh Choh feasibility study reflecting delivery of an average of 67,500 ounces of gold annually for Contango's account in 2025 and beyond, and with gold at record highs, we remain committed to adding shareholder value by executing on our 'Hybrid Royalty' model focusing on efficiently advancing our development stage projects using our DSO approach," said Van Nieuwenhuyse.
Contango Ore has received federal permits needed to build a road that connects the Johnson Tract camp and the proposed portal at the JT gold deposit.
Contango has recently achieved several important milestones at Johnson Tract, a gold project the company brought into its portfolio with the July acquisition of HighGold Mining Inc.
Home to a high-grade gold deposit next to the Cook Inlet in Southcentral Alaska, Johnson Tract has all the qualities Contango is looking for in a hybrid royalty project.
The JT Deposit at Johnson Tract hosts 3.49 million metric tons of indicated resource averaging 5.33 grams per metric ton (598,000 ounces) gold, 6 g/t (673,000 oz) silver, 5.21% (400.8 million pounds) zinc, 0.59% (43.1 million lb) copper, and 0.67% (51.5 million lb) lead.
When you add up the value of all the metals, this comes to 9.4 g/t (1 million oz) gold-equivalent.
Contango, which plans to establish an underground mine at JT, is roughly halfway through a 3,000-meter drill program to upgrade the resource, collect samples for more detailed metallurgical testing, and gather geotechnical and hydrologic data ahead of developing a roughly 1-mile-long tunnel to the bottom of the currently outlined deposit.
The tunnel will serve as a platform for the closer-spaced underground drilling needed to complete a feasibility study for a mine at JT.
Contango recently received the 404 Wetlands Permit from the US Army Corps of Engineers required to construct an access road from the Johnson Tract camp to the proposed portal and has entered into a memo of understanding with the Alaska Department of Natural Resources Office of Project Management and Permitting to begin the process of gaining the required state permits.
The company has also engaged SRK Consulting Canada Inc. to complete a preliminary economic assessment developing a mine at Johnson Tract project using the company's direct shipping ore strategy.
Alaska's newest gold producer plans to resume underground drilling at Lucky Shot, a high-grade gold project about 70 highway miles north of Anchorage, next year.
"Contango expects to finish the year with a strong balance sheet and be well positioned to execute on our plan to advance our Lucky Shot and Johnson Tract development stage projects," Van Nieuwenhuyse said.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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