Contango ORE Announces Pricing of $15 Million Underwritten Public Offering

Rhea-AI Summary

Contango ORE (NYSE American: CTGO) announced the pricing of its underwritten public offering of 731,750 units at $20.50 per unit, totaling approximately $15 million in gross proceeds. Each unit includes one share of common stock and one-half of one warrant, exercisable at $26.00 per share for 36 months. The offering is expected to close around June 12, 2024, with proceeds intended for corporate purposes, including exploration of the Lucky Shot Project and HighGold's Johnson Tract. Canaccord Genuity and Cormark Securities act as joint book-runners, with Roth Capital Partners as co-manager.

Positive

• Expected gross proceeds of $15 million from the offering.
• Units priced at $20.50 per unit, indicating investor interest.
• Warrants exercisable at $26.00 per share, potentially boosting future revenue.
• Proceeds to be used for corporate purposes, including exploration projects.
• Canaccord Genuity and Cormark Securities as joint book-runners, indicating strong underwriting support.

Negative

• Offering involves diluting existing shareholders by issuing new shares.
• Warrants exercise price of $26.00 may not be reached, depending on market conditions.
• Dependence on successful exploration of the Lucky Shot Project and HighGold's Johnson Tract for return on investment.
• Offering expenses and underwriting discounts will reduce net proceeds.

Insights

Financial Analyst

The announcement of Contango ORE, Inc.'s $15 million underwritten public offering is a significant development. The offering price of $20.50 per unit, along with each unit comprising one common share and one-half warrant, suggests a strategic approach to raise capital. The ability to exercise these warrants at $26.00 within 36 months provides potential for future equity dilution, but also signals confidence in the company's growth prospects.

Raising $15 million in gross proceeds, before underwriting discounts and commissions, sets the stage for further exploration of the Lucky Shot Project and the anticipated HighGold acquisition. These initiatives could enhance the company's asset base and growth potential. However, the exact impact on earnings and shareholder value will depend on the successful execution of these projects and market conditions.

From a retail investor’s perspective, it's important to note both the potential for growth and the risks associated with equity dilution and project execution. Monitoring the company’s use of these funds and progress in exploration activities will be crucial.

Market Research Analyst

The structure of the offering, with units consisting of stock and accompanying warrants, is a balanced approach that can attract a broad range of investors. The $20.50 price point and $26.00 warrant exercise price reflect a premium that investors may be willing to pay for future upside. However, the 36-month exercisability period introduces a medium-term horizon that investors should consider when assessing their investment strategy.

Given the intended use of proceeds for general corporate purposes and project exploration, this capital can potentially accelerate Contango’s growth trajectory. The focus on exploration projects like Lucky Shot and Johnson Tract fits within the industry norm of reinvesting into high-potential areas to drive future returns. This can be particularly appealing for investors looking for exposure to early-stage mining projects with high reward potential.

Investors should weigh the speculative nature of exploration against the potential upside, keeping an eye on industry trends and commodity prices that can significantly impact project viability and returns.

FAIRBANKS, Alaska--(BUSINESS WIRE)-- Contango ORE, Inc. (“Contango” or the “Company”) (NYSE American: CTGO), today announced the pricing of its previously announced underwritten public offering (the “Offering”) of 731,750 units (the “Units”) of the Company at a price of $20.50 per Unit. Each Unit consists of (i) one share of the Company’s common stock and (ii) one-half of one accompanying warrant. Each whole accompanying warrant is exercisable to purchase one share of the Company’s common stock at a price of $26.00 per warrant, exercisable for a period of 36 months. The shares of common stock and warrants will be issued separately but can only be purchased together in the Offering. All of the Units in the Offering are to be sold by Contango.

Before deducting the underwriting discounts and commissions and other offering expenses, the Company expects to receive total gross proceeds of approximately $15 million. The Offering is expected to close on or about June 12, 2024, subject to the satisfaction of customary closing conditions.

The Company intends to use the net proceeds from the Offering for general corporate purposes, which may include working capital, continued exploration of the Lucky Shot Project and exploration of HighGold’s Johnson Tract, part of the HighGold acquisition that the Company anticipates closing by July 2024.

Canaccord Genuity and Cormark Securities are acting as joint book-runners for the Offering. Roth Capital Partners is acting as co-manager for the Offering.

The Offering is being made pursuant to an effective shelf registration statement on Form S-3 (File No. 333-260511) previously filed with the U.S. Securities and Exchange Commission (“SEC”) and declared effective on November 17, 2021. The shares and the accompanying warrants may be offered only by means of a prospectus. A preliminary prospectus supplement and the accompanying prospectus relating to and describing the terms of the Offering, which form a part of the effective registration statement, have been filed with the SEC and are available on the SEC’s website at www.sec.gov/edgar. The final terms of the Offering will be disclosed in a final prospectus supplement to be filed with the SEC. When available, copies of the final prospectus supplement and accompanying prospectus relating to the Offering may also be obtained by contacting Canaccord Genuity LLC, Attention: Syndication Department, 1 Post Office Square, 30th Floor, Boston, MA 02109, or by email at prospectus@cgf.com or Cormark Securities Inc., Attention: Equity Capital Markets, Royal Bank Plaza, North Tower, Suite 1800, Toronto, Ontario, M5J 2J2, or by email at ecm@cormark.com or telephone at (416) 362-7485.

This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

ABOUT CONTANGO

Contango is a NYSE American listed company that engages in exploration for gold and associated minerals in Alaska. Contango holds a 30% interest in Peak Gold, LLC (the “Peak Gold JV”), which leases approximately 675,000 acres of land for exploration and development on the Manh Choh project, with the remaining 70% owned by an indirect subsidiary of Kinross Gold Corporation (“Kinross”), operator of the Peak Gold JV. The Company also has a lease on the Lucky Shot project from the underlying owner, Alaska Hardrock Inc. and through its subsidiary has 100% ownership of approximately 8,600 acres of peripheral State of Alaska mining claims. Contango also owns a 100% interest in an additional approximately 145,280 acres of State of Alaska mining claims through its wholly owned subsidiary, which gives Contango the exclusive right to explore and develop minerals on these lands. Additional information can be found on our web page at www.contangoore.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements regarding Contango that are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995, based on Contango’s current expectations and includes statements regarding future results of operations, quality and nature of the asset base, the assumptions upon which estimates are based and other expectations, beliefs, plans, objectives, assumptions, strategies or statements about future events or performance (often, but not always, using words such as “expects”, “projects”, “anticipates”, “plans”, “estimates”, “potential”, “possible”, “probable”, or “intends”, or stating that certain actions, events or results “may”, “will”, “should”, or “could” be taken, occur or be achieved). Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to: satisfaction of customary closing conditions related to the Offering and sale of the shares of common stock and the accompanying warrants, and Contango’s ability to complete the Offering; the risks of the exploration and mining industry (for example, operational risks in exploring for, developing mineral reserves; risks and uncertainties involving geology; the speculative nature of the mining industry; the uncertainty of estimates and projections relating to future production, costs and expenses; the volatility of natural resources prices, including prices of gold and associated minerals; the existence and extent of commercially exploitable minerals in properties acquired by Contango or the Peak Gold JV; ability to realize the anticipated benefits of the Peak Gold JV; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the interpretation of exploration results and the estimation of mineral resources; the loss of key employees or consultants; health, safety and environmental risks and risks related to weather and other natural disasters); uncertainties as to the availability and cost of financing; Contango’s inability to retain or maintain its relative ownership interest in the Peak Gold JV; inability to realize expected value from acquisitions; inability of our management team to execute its plans to meet its goals; the extent of disruptions caused by an outbreak of disease, such as the COVID-19 pandemic; and the possibility that government policies may change, political developments may occur or governmental approvals may be delayed or withheld, including as a result of presidential and congressional elections in the U.S. or the inability to obtain mining permits. Additional information on these and other factors which could affect Contango’s exploration program or financial results are included in Contango’s other reports on file with the SEC. Investors are cautioned that any forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from the projections in the forward-looking statements. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Contango does not assume any obligation to update forward-looking statements should circumstances or management’s estimates or opinions change.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240611096036/en/

Contango ORE, Inc.

Rick Van Nieuwenhuyse

(907) 888-4273

www.contangoore.com

Source: Contango ORE, Inc.

FAQ

What is the pricing of Contango ORE's (CTGO) underwritten public offering?

The offering is priced at $20.50 per unit.

How many units are being offered in Contango ORE's (CTGO) public offering?

A total of 731,750 units are being offered.

What do the units in Contango ORE's (CTGO) offering consist of?

Each unit consists of one share of common stock and one-half of one warrant.

What is the exercise price of the warrants in Contango ORE's (CTGO) offering?

The warrants are exercisable at a price of $26.00 per share.

When is Contango ORE's (CTGO) offering expected to close?

The offering is expected to close on or about June 12, 2024.

What are the intended uses for the proceeds from Contango ORE's (CTGO) public offering?

The proceeds will be used for general corporate purposes, including exploration of the Lucky Shot Project and HighGold's Johnson Tract.