Johnson Tract Project Estimated To Produce 102,258 Gold Ounces Annually

FAIRBANKS, AK - Contango ORE, Inc. has completed the Technical Report Summary (TRS) on the Johnson Tract Project, located in Alaska. The TRS summarizes the results of an Initial Assessment (IA) of the potential viability for a seven-year life of mine (LOM), underground mining operation, utilizing the same direct ship ore (DSO) approach as the highly successful Manh Choh mine.

Rick Van Nieuwenhuyse, President and Chief Executive Officer said, "We are very pleased to release the results of our Initial Assessment for our Johnson Tract Project. Assuming a price of $2,200 per ounce of gold as the "Base Case", the Project generates a Post-Tax NPV5 of $225 million and IRR of 30% with a one-year payback from commencement of commercial production.  Assuming a price of $3,000 per ounce of gold price demonstrates an NPV5 of approximately $400 million and IRR of 45% with less than a year payback from commencement of production. Initial capital costs are estimated at a modest $214 million with an all-in-sustaining cost (AISC)1 of $860 per gold equivalent ounce (GEO) sold at an average GEO ore grade estimated at 7.58 grams per tonne (g/t). Based on current resources, it is estimated that Johnson Tract will produce an annual average of 102,258 GEO and that 90,692 GEO will be recovered after processing and refining over the seven-year operating life (following the Initial Capital/Pre-Production phase). Once we get underground, we believe that drilling will define additional resources that will extend the current LOM.  

We look forward to investigating potential upsides to improve the economics and extend the mine life, which includes additional underground drilling to expand the resource to extend the known orebody down dip and along strike. Another upside that we plan to evaluate is the use of ore sorting to upgrade run of mine ore grades at site by using sensor-based sorters to separate waste material from higher grade ore. This would result in two improvements - fewer tonnes to transport and higher head grade feed to the mill, resulting in improved economics.

We are currently focused on permitting the underground tunnel to access the million-ounce resource and conduct a detailed underground in-fill drill program. We will also conduct metallurgical, geotechnical and hydrology studies necessary to complete a feasibility study, which will include a detailed mining and transportation plan, as well as select a specific site for processing the ore along with any modifications necessary.  In addition, we will need to conduct detailed environmental baseline work along the Road and Port Easements that have already been granted to Cook Inlet Regional Inc. ("CIRI") by the Federal government earlier this year. We expect the permitting for the proposed tunnel and adjacent laydown site with the State of Alaska will take one year.  

Part of Contango's management team just spent a week in Washington D.C. for the "Alaska on the Hill" event. We began the week meeting with CIRI, our Alaska Native Corporation partner. We had great meetings with the heads of various federal agencies that will be involved with permitting the CIRI Road and Port Easements, along with constructive meetings with our two Senators, Murkowski and Sullivan, and our Congressman, Nick Begich. We were very impressed with the overwhelming support for permitting projects in Alaska, along with the recognition of the importance of developing a domestic source of critical metals. It was noted in such meetings that the Johnson Tract project is the only critical metals mining project in Alaska that is ready for permitting and may be selected when appropriate for FAST-41 priority permitting under the newly created National Energy Dominance Council (NEDC) and Permitting Council under the direction of the President's Executive Order, "Immediate Measures to Increase American Mineral Production”.  We look forward to working with the Trump Administration and our Congressional delegation to develop the Johnson Tract project and help secure American supply chain of four critical metals."