- Contango (CTGO, Financial) reveals robust economic potential in its Johnson Tract Project with a post-tax NPV5 of $225 million.
- Initial capital costs are set at $213.6 million, with a competitive AISC of $860 per gold equivalent ounce.
- The project anticipates a one-year payback period, contributing to its strong investment appeal.
Contango ORE, Inc. (CTGO) has shared a promising Technical Report Summary for its Johnson Tract Project in Alaska, noting compelling economic outcomes. The project demonstrates a post-tax net present value (NPV5) of $225 million and an internal rate of return (IRR) of 30%, based on a gold price of $2,200 per ounce as the base case scenario. With such figures, the project boasts a payback period of just one year after production begins.
The seven-year underground mining operation, which follows the direct ship ore (DSO) model, mirrors strategies from the successful Manh Choh mine. Initial capital expenditure is estimated at $213.6 million, considerably low for a project of this magnitude, and the all-in sustaining cost (AISC) is projected to be $860 per gold equivalent ounce. This positions Johnson Tract within the competitive range of the global cost curve for gold producers.
With an anticipated annual production of 102,258 gold equivalent ounces at a grade of 7.58 g/t, the project also benefits from potentially diverse revenue streams, including zinc and copper outputs. Stakeholders are optimistic about extending the mine's lifespan through further underground exploration and are actively pursuing the necessary permits facilitated under the National Energy Dominance Council’s FAST-41 priority permitting.
Contango is focusing on securing permits for developing an underground tunnel and plans additional drilling to enhance resource estimates, suggesting resource expansion opportunities. The project has garnered favorable attention from federal agencies, highlighting its significance as a domestic source of critical metals.
