Contango Silver & Gold Inc.

Even faster than usual, I'll say good morning, good afternoon, or good evening, depending on where in the world you're coming in from. As always for Contango Events, it's a very international audience, so folks coming in from Switzerland, from APAC, from Alaska, I appreciate everybody joining us. I've got with me today Rick Van Nieuwenhuyse, CEO of Contango Silver & Gold, who was kind enough to put out a major corporate update right after Labor Day to keep us on the loop. Rick, how are you?

Good, good to see you, Romeo.

Yeah, good to see you. So your last day is going to work for the folks in the room. For those of you who are regulars, you can just stop listening for the next 30 seconds. You've heard this a million times. There's a chat button at the bottom of the screen. I really encourage you to ask questions at any point during today's event. It's probably going to be a shorter one. We're listening to about a half hour. But as usual, I've got a bunch of questions based on the release. But I do want to hear from you guys as well. Some questions were submitted in advance over email. So we'll make sure we get to those. Then any questions that come in from the live audience, we'll pick those up as well. Two other pieces of housekeeping. This is being recorded. It will be available for replay probably midday Eastern Time, certainly today. So it will get right into your inbox. It will also be on Six's YouTube channel. There's also a request meeting button at the bottom of the screen. You can press that to have an opportunity to meet with the Contango Silver & Gold team. I'll be passing along that along with your registration information as soon as the event ends. You can press that at any point during today's event, including after it ends. But That's the boring stuff. Rick, I want to get into the press release. Because today, yesterday's release reads like a checklist where it's one of those every box gets ticked. You have three core assets, two jurisdictions, drilling, road building, underground development, all on time, on budget, in a single field season. Most companies, your size and bigger and smaller, struggle to pull off one of those programs. So I'd love if you could give us a sense of what it takes behind the scenes to run a wild season like this with so much going on.

Well, I think I said earlier this year that this year would be about execution and just getting things done. And that is pretty much what we did. And it really starts with putting the whole team together. Remember, we merged two companies, Contango Ore and Delibard & Silver. And so that was really the first thing to do was to get the teams together and Integrate the two teams, and I think we've demonstrated that we've done that flawlessly. We've had a very successful year, very busy year. I think we're over close to 70,000 meters of drilling in total between the two main projects. And that's exploration drilling, infill, expansion. We've also done geotechnical work and things like that at Johnson Tract. Yes, it's been a very busy year and all projects have executed exactly what we had planned to do. You know, at Lucky Shot, the underground development, the exploration building, announcing results. We're on track to release an MRE on that early next year, first half of next year. Johnson Track Road Building actually got more accomplished there than planned. We got the lay-down area completely done, which we had actually expected to do next year, but we got that done this year. So now the road is connected between the camp and the proposed portal site. Permitting on the portal site is, I'll say, substantially complete. You never quite ever complete permitting. You're always permitting something.

Or renewing it. There's always a permit.

Correct. It's an ongoing process, and we're substantially permitted there to build the tunnel. So next year will be about building the tunnel, and then it'll be about doing the infill drilling there. And of course, Get Salt, I think that's the one that really demonstrates how the teams have worked together very well. We had planned for a 40,000-meter drill program. We're going to be over 50,000 meters. And that's just because of the efficiencies and just the team working together. And that's a difficult place to drill. It's a remote project. It's helicopter support, it's steep terrain, and I really have to thank all of our contractors, helicopter contractors, the pad builders, the feed fellers, the drillers, the geologists. It's been a very busy year, and I think the thing to emphasize is it's been a very safe year. We've done all this work, the 70,000 meters of drilling, the road building, the bridge building, underground drilling, underground tunneling, and it's been 100% safe. No LTIs, and that's how we want to work, and that's how we want to execute our programs.

Awesome. One thing I noticed in the PR is a pretty big Moncho story in the release. I think it might be getting less attention. I've certainly seen less attention. I think it should be getting. As of the mill modifications for recovering the higher-grade sulfide ore from the sub-pits, are done and working according to plan. That was one of the real technical question marks coming into the year as far as I understood it. So what does it mean now that that's proven out, that's behind you?

The first half of this year for Montreux was always going to be the struggle, you know, two quarters. The first half of the year was about transitioning from North Pitt to South Pitt. Lots of pre-stripping. So, you know, you've got a lot of equipment moving waste material to get at the ore in the south pit or the main pit. And, of course, that ore is more sulfide rich. It's higher grade and it's more sulfide rich, which means you need the oxygen plant installed to make the recovery sufficient. And so that was done. It was completed last quarter and it's now operating. and so we should see our, you know, recoveries in the 80s to low 90s depending on the sulfide, the amount of sulfur that really dictates how efficient the oxygen plant works. So that's done and we'll look forward to, we're in the middle of the third batch for the year and we'll probably run all month, maybe a little bit into October. The production will actually go across probably two quarters. I'm not sure how Michael will report that, but I'll let him figure that out. But, yeah, it's an exciting time for Montreux because those higher grades in the main pit. I mean, that's the main pit because it's the bigger one. And now that the prescripting is substantially done, we should see our costs come down and our production go up. And we'll get the real benefit of that next year. We're guiding towards 75,000 ounces of production and a lower cost, you know, $1,200, $1,300 oil and sustaining costs. And now that, again, the oxygen plants installed, in fact, you have a redundant system that they've installed, so we should see those efficiencies in the recoveries and in the throughput.

Great. I do want to move over to Lucky Shot because I had some news that excited me this year. A year ago, nobody was talking about a KM Gain system. Now, your drill contractor arrives this week to put 1,100 meters into it from the new West Rift extension. For investors just catching up, we're here that mostly follow another project of Contango's. What is KM and why is this jumping the queue for everybody's attention?

Yeah, so the KM vein, it's a new discovery, and that's what's exciting. And whenever you're exploring a district, which, you know, the Lucky Shot project is a district. It's not just one little vein. There's a whole series of veins in the district. But at Lucky Shot itself, the vein that we were exploring is basically almost east-west striking and dipping to the north. And when we were building the tunnel to... To evaluate that with the drilling, we used the fan shot type drilling across the tunnel. We came across a vein dipping at right angles, basically a conjugate set vein. We named K.M. after Keith Miles, who's one of the fellows who worked for us at the project. Sadly, he passed away, but he'd been a long time in the district. He was a minor in the district for quite a while. And so that vein is dipping at right angles, and it is a new discovery. It's never been explored, never been described in the district before. So that makes it exciting, and the fact that it was running up to 10 ounces per ton. That also makes it very exciting. So great, you know, greatest king, as they say. So vein was dipping away from us at the end of the tunnel, so we now extended the tunnel about 100 meters, and so the vein is above us, and so we're going to do fan shots like this above us, just spray up holes like that. We're going to outline an area of probably 100 meters by almost 100 meters. It's a little irregular shape, but it's roughly that. And so when we're seeing these kind of multi-ounce grades, you can build ounces quickly. That drilling will get underway at the end of the week. The drillers should be all installed, all the airbag is installed, electrical and water is installed now. So they'll get up and running and probably take about a month to get that drilling done. And then unfortunately it takes a couple of months to get your assays back. So that's always the frustrating part of exploring this, especially this time of year. They're putting their brothers out drilling so the labs are packed. But that information will come out before the end of the year is what we're planning.

Sure. People email in every day asking, you know, why doesn't somebody put an ask for results in? It's not really always up to them. These labs are real backed up sometimes. It takes, you know, in heavy seasons.

Yeah, it's a frustration that I think everybody in the industry deals with right now, and it's, well, we'll get sidetracked on that topic.

Yeah, no, for sure. Because I do want to talk about surface drilling at Coleman, because it wrapped with 29 holes, including that 2.45 meter hit, creating over 86 grams. Now you've got 10,000 meters of underground drilling running through February, feeding the FS, which is scheduled for next year, if I'm not mistaken. So how did KM and the Eastern L2 Extension Change what that study could look like versus what you were modeling six months ago. So I feel like it's changed pretty significantly.

Yeah, certainly adding the KM being in the mix, and obviously it's slow exploration, so we got, you know, we planted where we could, and it ran pretty well, so we'll do this 1,100 meters of filling and see what we get. But, you know, clearly what's significant about KM is it's right there in front of us. It takes very little development work to actually you know, put that into production. So, if that, you know, if we end up hitting, you know, sort of a lot of, you know, plus 10 gram material in that vein, we'll, you know, we'll look to integrate that into the overall mine plan. And it may well change our overall development scheme for the deposit. But we're not there yet. We're just, we're still going to go, you know, do the exploration. We're almost finished building the East Rift, which is basically just opposite the West Rift, down the in-fetch tunnel, and then one goes off west, one goes off east. The East Rift's almost done, and we'll bring a second drill rig in and start drilling that in about a month or so. And that's targeted on the classic lucky shot vein system. In fact, it's literally right underneath where they mined it before. And so, and then meanwhile, we advance the tunnel, and we build... Two more drifts further down, further at the end of the tunnel to continue extending the Lucky Drive vein down dip, further down dip. Obviously, if we really like what we see at KM, we'll adjust. The exciting thing about KM is it's never been explored, so right now we're just going to test 100 meters of it, but once it's going, we'll probably keep testing it, especially if it keeps running multi-ounce.

Yeah.

We like multi-ounce.

It's exciting to have a drill core that's, you know, worth a big pile of money, just a drill core.

It's pretty neat. It is all this, you know, visible gold, right, the DG that gets reported, and that is exciting. It's always exciting for a geologist. So when you look, by the time I get to look at the core, it's got all these little red circles on it, so it makes it really easy for me to find the real gold.

What some people don't know is exploration geologists are the biggest adrenaline junkies possibly in the world. These are like base jumpers. I don't think people realize that. But I do want to talk about Johnson Track for a second because I'm bouncing around your project. And I hate to contradict you because I know you've previously described it as a permitting story. But it feels to me like this summer it graduated into a bit of a construction story. Because the road from Camp to the Portal is built. Two bridges are in. Portal pad is done. So what does having that pad sitting ready to go unlock for 2027 for this project?

I mean, it sets us up for continued execution and get the tunnel built. The team that we're building at Lucky Shot to build tunnels, that's going to transition really nicely to get all those folks who we've worked with and we've worked with for a while now to go over from Lucky Shot down to Johnson Track and start building a tunnel there. So a couple of things we have to do to accommodate that, because once we get underground, we want to be underground year-round. So we're upgrading the camp, so we're starting to work on that this year. It won't get completed until next year, but next year we want to be working year-round through the winter. So there's a substantial upgrade to do to camp. But yeah, the portal sites, All set to go. I think you can see from the photos that the bridges are well built. There's nice stout bridges. The road looks great. You can drive a sedan on it if you want. It's a good road. We've got lots of material to work with, and that's a big advantage of working at Johnson Tracks is you have a big river system right through there, and so you've got a lot of material to work with. It's nicely channeled, and obviously that's what the bridges and the abutments to the bridges do with avian baskets. You know, they keep the water under controls, but it's not kind of going all over the place. So, yeah, it's been a good, solid year of work. We've got a great crew out there as well, and again, they work safely, and so we're really proud of what they've accomplished in a relatively short period of time.

Yeah, no, it's a lot going on. And speaking of that, today I want to talk about Contango generally, and then just to kind of summarize all the work. 50,000 meters at Kitsall, 5,800 meters plus an underground program at Lucky Shot, road construction at Johnson Track, all paid out from the Moncho cash flow without going back to the markets, which right now is great. That's good news for everybody. I'd love if you could talk about the financial discipline, I guess, it takes to keep all these programs on budget at the same time.

Yeah, that's where the teamwork comes together. You plan out a budget, you put it forward, then you sort of critique it about are you really planning out things accurately from a talking standpoint, but also from a timing standpoint. We just had a big meeting yesterday where we had the whole team together discussing, you know, here's what we've accomplished this year. What are the plans for next year and what does it need for dollars? What does it need for people? Those are the two key things. And then making sure you get the timing right so that you're doing the appropriate work at the appropriate time so you're not trying to get things done when the weather's terrible. Sure. Weather's hard to predict day to day, but There are definitely, you know, rainier parts of the season and, you know, and again, so, you know, and I'll give you an example. We got the surface drill program at Lucky Shot shut down a little early because we got, you know, about six inches of snow. And we want to work safe. That's a big criteria for us. And so we said, okay, we had, you know, a couple of holes that we could drill. We said, let's just wrap it up. And this snow was not one that was going away. You could sort of feel it. Six inches going to 12 inches, not a nice sunny day tomorrow. So those are the sort of things, you know, we wanted to, if you get cut a little short, it's not a big deal. Those are holes we can drill next year or the year after. Sure. But that's the timing and just making sure you've got your budgets accurate. I don't want to say tight because we always want to have a contingency in things that we don't always use. But most of those are due to weather delays. But we had a lot of equipment working this year, road construction equipment. We had a lot of helicopters moving equipment. and again, doing that at the right time of the year and doing it safely is the key parts of staying on budget.

I'll certainly say, being from Ottawa, you can tell when six inches of snow are going to be a keeper. You just get a sense for it. These are the ones, these are sticking around. You do get a sense.

It was really winter this year in Alaska, for sure. I think it shut a lot of folks down early.

I saw pictures of snowcaps in August still, which, man, that is, those get different up there. But I want to look into 2027. This is kind of a follow-on, I guess, from the last question. Because each one of the assets is asking for capital, as you talked about. You've got underground drilling through February, drift development camp expansion at Johnson Track, and obviously the engineering work at Kitts also going after the MREs. How are you thinking about prioritizing these dollars? How does that math work for the team strategically?

Well, I guess it really starts with Montreux and the production we're expecting out of Montreux. And we're using a $3,700 gold price to do our financial projections. So I think we're being on the conservative end of things there. And so the cash flow that we're going to generate We obviously want to spend more than that. And so we've got things planned out where I'm going to predict a little bit here. We're going to get a feasibility study done at Lancashire. Most of the work gets done this year in terms of the tunneling and the drilling. We'll spill over into about February of next year. But then it's just working with the data to complete a feasibility study. And again, I call this feasibility life because it's with the DSO model. We're not building a mill and a tailings facility and a big power plant to run all that. It's definitely a mine plan and a transportation plan effectively. And they're working out an offtake arrangement for production. And so I think for Lucky Shot, that's pretty straightforward. and then we can obviously pull the trigger in sort of the second half of the year on the development plan. Here's the feasibility study. We're going to execute the feasibility study. At Johnson Track, the timing is based on what we're doing at Lucky Shot this year. We're going to be doing at Johnson Track next year. We probably won't get started until we have mobilized equipment in and all that, so we probably actually won't get tunneling until August, September, the latter half of the summer, because you've got to get everything set up. But then you're doing it all year round, because now your campus is upgraded. And then at Kitzold, I think it'll be a little less tunneling. We had five grades turn in this year. I think it'll be only a couple next year, and we'll be working towards will update again the MRE. We've got one coming out here shortly by, you know, sort of before the end of the month. But then we've got another 50,000 meters of drilling we did this year to incorporate. So that'll get updated, you know, first half of next year. EM assays probably won't get all the assays back until January.

Of course.

Late in the year. And so then, you know, I'd say, you know, by the end of the first quarter or early second quarter, we should have the MRE updated. and so I guess all the programs, we're not doing all the same things in all the programs. We're all slightly out of phase, which is nice. You've got, like I said, the drill team and the underground mining team from Lucky Shot can basically transition over to the Johnson track and you know you've got a good group of people who have worked together and can work safely and get things done efficiently.

And I know, I'm just going to talk about Kitsalt really specifically for a second before I broaden out. This was the first full field season with Kitsalt under the Contango Silver & Gold banner. And all eight of the previous target areas were drilled, plus homestake. So 123 holes and an updated resource assessment landing, as far as I understand, in the next few weeks is our guess. So when that MRE comes out, I encourage everybody to keep a keen eye out for it. What should investors be looking at to judge whether this season delivered at Kitzel?

Yes, obviously there's a total number and we'll have moved a significant amount of the inferred resources into measured indicated. And indicated is really the one to focus on. As underground mines, you don't really get measured until you get underground. And so that's the significant part. Obviously, we've got a new zone that we're drilling on the 470. That won't come into play until next year because that's a new discovery this year. But we'll certainly highlight that when we release drill results, which will also be coming out here shortly. But if I just stick to the MRE, it's basically infill drilling and overall expansion of the resource. Keep in mind, this resource that's out there in the public, this almost 65 billion ounces of silver, a million ounces of gold, that's quite dated. It was sort of rebranded, but I think it's like a 2017, 2018 era resource, and there's been 150,000 meters of drilling since. A lot of it infilled. So the focus of the program was not to make 65 million ounces silver, 150 million ounces silver, whatever. It's to do infill drilling and to really understand the geologic controls. So it's a much tighter resource estimate. You'll see a lot less inferred. Obviously, if you've got new discoveries, you'll have more inferred on those. and then that obviously is what a lot of the drilling this year will update as well. But the MRE that will come out here in a couple of weeks, look for the inferred transitioning into indicated. Obviously, the gold and silver prices have changed significantly since that was released in 2023, I think it is, under the Dolly Barton banner. The gold prices and silver prices that were used then will be different from now. We're going to stick with the consensus pricing, which I believe is in the $50 neighborhood for silver and $3,500 for gold. There'll be some changes. When you increase the gold price, you lower your cut-offs, or you lower your average grade, Dynamics have to work. And we'll try to explain all that in the press release, but we'll have another forum like this and we can talk about it in more detail.

No, it's great. I look forward to getting into those numbers in detail. So I personally can't wait. Like I'm sure investors, I'm sure everybody calls you and says, I can't wait. So there you go. I do want to close on the calendar and then I'm going to get into questions. I know there's a lot in the chat. There's a bunch that came in over email. This last one for me, I promise, then I'll shut up. But I want to close the calendar because Torbert Northshare Assays are imminent. Kitzold MRE, as we said, lands probably this month. The rest of the Lucky Shot Surface Assays come in October. Q3 Financials, November. Underground results close to the winter. Rick never takes a vacation, as far as I understand it. But for someone new to the story, which of these moments matters most? Like, what should a keen investor be keeping their eye clearest on for the rest of the year?

Well, you know, I think the Silver story is a great story, and From my perspective, we wanted to acquire Kitzel because it's a world-class asset. There are not very many high-grade silver projects. And Kitzel is a silver mine. It's got some lead and zinc and gold as well. And by the way, on the MRE, we're not going to see a huge increase in the gold because that was all in filtering at Homestake. All the gold is at Homestake and Homestake Silver. So you're not going to see that number like grow significantly. Again, that was all upgrading of current resources. So there's going to be a lot of news flow on Kitsalt and on the silver grades. It's a high-grade silver deposit. There is a significant amount of gold at the home stake and home stake silver. We kind of divide the district into these two target areas. The Torbrett Dolly Varden to the south, which is silver with lead and zinc, very little gold. And then up on the north, you've got Homestake and Homestake Silver that are silver-rich but also have a significant amount of gold. Again, low base metals. But, yeah, I'd say focusing on, in terms of news flow, there's going to be a lot of news flow on Kitzel over the next several months. through the end of the year, basically, and it's silver, silver, silver.

Awesome. How exciting. Okay, getting into questions from email and then stuff in the chat. So the first one, it was a fairly long, complicated question, but what it amounts to, so I'll stick to, I think, just the guts of it, which is, can you update us on the mill?

Yeah, short answer is I don't have anything to update you on other than we continue to work on a number of opportunities for building a mill or acquiring a mill. And we are looking at both those options. So, yeah, I hate to say, you know, stay tuned, but that's really all I can say right now. We're definitely advancing those discussions on multiple fronts.

Appreciate it. One person wanted to know if you could comment on Manchot's seasonal exploration activity. They wonder if there's any chance, anything between you and Kinross, for Life Extension for that mic.

Yeah, short answer is we don't have any results yet from this year's drilling. And I'll say this year's drilling was interrupted by a pretty serious fire in the Toke area. Sure, yeah. Literally right near the town of Toke. Unfortunately, a number of people lost their homes. So that definitely interrupted our field season and basically cut it short. So along with the early snow that I talked about, all those things sort of came together. So we'll have results of this year's drill program out later in the year. I'm going to guess, you know, towards the end of the year. And we'll have our next joint venture meeting, I think, in November. So that'll be probably the time period when we'll get some more results on the exploration front.

Okay, great. and three people emailed in to ask a question we've already answered, which is when are you expecting an updated MRE for Kitzholtz? As you said before, probably this month, so stay tuned, folks.

Probably.

So questions from the chat. The first one, and I've already warned this might be a question that we end up sending to Mike because there's a lot of math here, but I'll throw it to you anyway, Rick, for just any guidance that you can give. He wants to know, assuming you hit your 2027 production guidance of 80,000 ounces at 1,500 ASIC, What's a good range of operating cash flows for the fiscal year of 27? Now, he wants it at 5,000 ounces of gold, but do it at whatever gold you have an answer for. $5,000 gold price? Yeah, that's right. That's what he's looking for.

Oh, it'll be well in excess of $200 million. Probably almost $250.

Okay.

If you've got $5,000 gold, yeah.

It's a big number.

Next year is the banner year for the project, and... Yeah, if you have $5,000 gold, we'll have a lot of cash flow.

Yeah, and as a degenerate gold bull myself, I think we'll see $5,000 by the end of the year myself, but you never know.

I won't be surprised. I mean, nothing is fundamentally changed. We're still printing money, and the Fed's between a rock and a hard place, and the Fed's fighting the Treasury, and Interesting times, but you better own some gold and silver.

Certainly my view, too. Physical stock, everything available to you. And the same person just noted in the chat, we should communicate this every time we have a public update. Thanks for that note. And I agree. I will have that question, Brad, every time this comes up. So, Rick, I'll make you do some math. A couple of additional questions. Wesley wants to know what indigenous groups you work with at Johnson Track?

So the Johnson Track project is owned by an Alaskan native corporation, Cook Inlet Regional Incorporated. And then there are a number of villages that have tribal councils. Ionic is the closest one on the same side of Cook Inlet. Anilchik, and Seldovia, some on top are other ones on the other side of the Cook Inlet. And then K'Nik, those are probably the main ones that we've had on a regular basis interaction with. We're currently looking at doing some work for some gravel material. So we're working with two of the tribes on that because they own the I shouldn't say the tribe, it's actually the village corporation that holds the surface rights. So we're working with those pretty much on a regular basis. Yeah, so those are the main ones. They're basically all around sort of the Cook Inlet area, and hence the name Cook Inlet Reasoning, for the regional corporation. So the regional corporation owns the subsurface and the surface at Johnson Track proper, but the village corporations own surface lands elsewhere, and that's where we're working with a couple of them on some potential borough material sites. for building a road down there. When we start building the road down to the coast, that's where we're working with the villages.

Great. And Trevor wants to know, he says, I don't think so, but he's curious, could opposition at Johnson Direct cause any challenges for the next stage for the project?

I think there's a lawsuit out from the Center for Biodiversity, Cook Inlet Keepers, Center for Wildlife Diversity is a national NGO. Cooking the Keepers is a state of Alaska centered NGO. And their main concern is the beluga whales, an endangered subspecies. They're cooking the beluga whales, an endangered subspecies. So obviously we're doing a lot of work to understand where the whales are and where the whales are at certain times of year so we understand where we places we should try and avoid. So those those studies are ongoing right now. We've got basically a whole year's worth of data now or close to a whole year's worth of data. So all of that will be incorporated into the environmental permitting process, which is going on for building the road down to the coast and building a bars landing facility. All of that will be in there. That's all All the required permits on the back side are part of FAS 41. So you go on the dashboard, you just go to FAS 41 and you just type in Johnson Track. It will take you right to the page and you can see all the permits that we're required to do, all the work we're required to do to get the permits and understand the timing. And basically, and obviously we have to stick to getting all of our work done on time to stick to the Thank you, Rick. lawsuit to delay the project. Look, we're in the United States. There's always potential for lawsuits. And so that's just, you know, that's just, you know, part of the terrain. So we think we're doing things in a way that are minimizing our environmental impacts at Johnson Tract because of the approach we're taking with the direct shipping ore model by itself. Sure. And obviously we're collecting as much science as we can to understand specifically the where the beluga whales are and when they are, when they are there. You know, some of them with a standpoint, you know, winter or summer, where they're coming and where they're going. But we'll understand all that and we can design a program to minimize the impacts.

Okay, appreciate it. Pivot back to math. And again, I'll throw this to Mike on email if you don't have it on the top of your head. But you know where net debt will end fiscal year 26 and fiscal year 27?

Yeah, so I don't have exact numbers in my head, but I think it's around 47 million currently. And by the end of next year, it'll be gone.

Okay. There you go. Appreciate that. And if you're looking for any more real specifics, Brad, I will get you connected to the team following. One question from Gillen from the chat. How did the North Pit at Montage Productions compare to what was assumed in Contango's reserve report?

That's a great question. So I'll kind of bottom line it. Ounces are accurate. Total ounces tends to be more tons and lower grade. And that's not an untypical relationship. So we have something we call the grade tonnage curve. So you can buy more tons at lower grade and get the same ounces. And that is more or less what we're seeing. And I think that's a... So it's an outgrowth of how the resource was estimated. And this is a SCARN, I don't want to get too technical here, but it's a SCARN type deposit. So it tends to be at really high grades over relatively narrow widths. And so when you're estimating those, what the model is telling us is that we've overestimated grade and underestimated tons. And so when you're mining, you're obviously mining at a much more detailed level than your block model is predicting. So you have a lot more data points. And so pretty much consistently we're seeing slightly lower grades and more confidence, but same analysis.

Somebody notes in the chat that Contango currently trades for only two times cash flow, so that's insane. I'm inclined to agree. I'll ask you to make no comment on that, Rick, but that's just a comment from the chat. One question, I think it's a good opportunity to talk about how indigenous corporations work generally in the States, because I want to know what is the indigenous group's position on Johnson Tract? How do they feel about the project?

I'd say, you know, obviously they selected this land for mining. We'll get into the long story, but the short story is that before they allowed the Alaska Native corporations to form and select lands, the state and federal government took all the lands that had oil and gas potential. So, Alaska Native corporations were left to select lands that had traditional cultural importance, and then in terms of economics, it was mining and trees. So that was kind of the order of how they ended up selecting the land. So in short, Cook Inlet Regional is very interested, and they have a royalty. It's a classic mining arrangement, mining lease. Very much like you did at Montreux, the tribe has a royalty, so the tribe has done really well. as their line has generated lots of free cash flow and lots of royalty payments. That'll work the same way with Cook Inlet Regional. They're very supportive of the project. They want us to do it right. They don't want us to go out there and make a mess. That's why we have regular meetings. They wouldn't allow us to become involved in a project if we were going to make a mess. It's their land. They're not going to allow that to happen. That's the That's the thing with private landowners. Private landowners take care of their land.

Yeah, seriously.

If you want to go see a mask, go look at something that the government did.

Yeah, fair enough.

Yeah, no, I think, you know, there's, in Alaska you have region corporations, village corporations, their lands are surface lands. and they tend to be right around the villages and the lands that were traditionally important to them. And then you have tribal governments. So there's, you know, there are a lot of different layers to sort of work with and interact with. And, you know, look, I mean, Cape Balloon is one of the villages, it's one of the furthest ones away from the project, but they're aligned with the Center for Biodiversity. So they're not in favor of the project. Not all the villages are supported, but that's just part of the politics and part of the dynamic that you have to work with. We try to work with all the, obviously the regional corporations, the landowners, so we work very closely with them, the villages we work with and interact with, and same with the tribal councils.

I appreciate the extra context, too. I think a lot of people don't understand, especially are Canadian viewers because it's a very different setup.

Very different, yeah.

Very, very different setup.

Alaska is very different from anywhere else in the lower 48. That's true. Very different.

Yeah, it's helpful, I think, for folks to understand. But I will close on the last comment in the chat. This is from Bruce. Paraphrasing, I believe, Ronald Reagan. If you want something screwed up, ask the government to come in and fix it. I'm trying to agree. but Rick, thank you so much. That was a great update. I think everybody should read the release in full but I hope you got some extra context from this interview. If you have any additional questions, please do hit that request meetings button at the bottom or reach out to Contango at any time. I'll be sure to answer your questions very quickly. Rick, thank you so much. Really appreciate your time as always. I think this was really helpful extra info for the release.

I appreciate it and thanks for great questions and If you have any others, don't hesitate to send them in. You can also just send them in to info at contangle4.com and we'll certainly get back to you.

Awesome. Thank you, Rick. Thanks, everyone, for joining. Have a great day. Thanks.