FAIRBANKS, Alaska - Contango ORE, Inc. (NYSE American: CTGO), an exploration company focusing on gold and associated minerals in Alaska, announced today the initiation of a public offering of its common stock alongside warrants to purchase additional shares. This offering, which will be sold by Contango, is subject to market conditions and there are no guarantees regarding its completion or the terms thereof.
The company aims to allocate the net proceeds from this offering towards general corporate purposes. These include working capital and funding continued exploration activities on the Lucky Shot Project and the HighGold Johnson Tract, which is part of an anticipated acquisition set to close by July 2024.
Joint book-runners Canaccord Genuity (TSX:CF) and Cormark Securities are managing the offering process. The offering is made possible by a shelf registration statement filed with the U.S. Securities and Exchange Commission (SEC), which became effective on November 17, 2021. The specific terms of the offering will be detailed in a prospectus supplement and the accompanying prospectus filed with the SEC.
Contango is known for its 30% interest in Peak Gold, LLC, which oversees exploration and development on a significant land area in Alaska, with the remaining 70% owned by Kinross Gold (TSX:K) (NYSE:KGC) Corporation. Additionally, Contango holds the lease on the Lucky Shot project and owns a 100% interest in approximately 145,280 acres of State of Alaska mining claims.
The company's forward-looking statements reflect expectations for future operations and are subject to risks and uncertainties, which may lead to actual results differing materially. These include the timing and completion of the offering, exploration and mining industry risks, and the potential impact of external factors such as financing availability and governmental policies.
In other recent news, Contango ORE, Inc. announced its Manh Choh project is moving forward as planned, with the first gold production anticipated in the third quarter of 2024. The project is 30% owned by Contango and operated by a Kinross Gold Corporation subsidiary. The full mining fleet is now operational, and all necessary site preparations are on schedule.
Contango also recently announced the acquisition of all issued and outstanding shares of HighGold Mining Inc. in a deal valued at approximately $37 million. The acquisition is expected to triple Contango's current resources by adding over 1 million ounces of gold equivalent at approximately 9.4 grams per tonne. Both these developments are part of the company's recent strategic moves.
InvestingPro Insights
As Contango ORE, Inc. (NYSE American: CTGO) ventures into a new public offering, potential investors might weigh the company's current financial stance and market performance. According to InvestingPro data, Contango ORE has a market capitalization of approximately $228.95 million, reflecting its valuation within the mining sector. Despite facing challenges in profitability, as evidenced by a negative P/E ratio of -4.18 and an adjusted P/E ratio for the last twelve months as of Q1 2024 standing at -5.26, the company has experienced notable price returns. Over the last month, the stock has surged by 25.83%, with a three-month return of 15.11%, signaling a strong short-term performance for investors who may be considering the stock amidst its offering.
InvestingPro Tips highlight that while Contango ORE's liquid assets surpass short-term obligations, indicating a solid liquidity position, analysts are skeptical about the company's profitability in the near term. Moreover, the company has not been profitable over the last twelve months and does not pay dividends, which might influence investment decisions for those seeking immediate returns. However, the strong return over the last month and three months could be enticing for those looking at capital gains.
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