Contango Ore, Inc. (CTGO) Q1 2025 Earnings Report, Transcript and Summary

Hey, good morning, good afternoon, good evening, depending on where in the world you're signing in from. Thank you all for joining me today. Today, I've got with me Contango Ore's CFO, Mike Clark; and CEO, Rick Van Nieuwenhuyse to go over Contango's Q1 financials. Mike got top billing because today is about financial, so he will be the start of today's show. Today is going to go is he's going to give a brief presentation, summarizing yesterday's release. Then I've got a few questions, but this is absolutely an interactive event. [Operator Instructions] I'll also say that today's event is being recorded, it will probably be in your inbox mid-afternoon, Eastern time. It will also be available on events.6ix.com and on our YouTube channel. Without further ado, I'm going to go off screen and hand it over to Mike just to summarize yesterday's press release.

Thanks, Romeo, and good morning and good afternoon. I'm just going to spend a few minutes just highlighting the quarter ended March 31, 2025 and just talk on the statement of operations and balance sheet. On the statement of operations, we recorded $19 million in income from operations, which includes $22.3 million in equity income from the Peak Gold JV, which is our 30% ownership in Manh Choh. We recorded a net loss of $22.5 million for the quarter, which includes an unrealized loss of $40.5 million related to the hedge contracts. Now this is primarily driven because gold started the year at $2,600 and ended the quarter around $3,100. We also recorded $2.7 million in interest and finance charges related to debt. At the Manh Choh operations, we sold a little over 17,000 ounces of gold with another 3,800 ounces in recoverable inventory. Our cash costs were about or $1,334 per ounce gold sold and our ASIC was $1,374 per ounce of gold sold. Our 2025 guidance remains at 60,000 ounces of gold with an ASIC of about $1,625 as we do expect, the ASIC will increase in later quarters due to sustaining capital going up related to replacing tractors on the ore haul route as well as a $5.7 million exploration drill program. On the balance sheet, we completed the quarter with $35 million in cash. We have marketable securities of about $900,000. Those subsequent to quarter end have increased to about US$4 million, and that's on our Onyx Gold Corp investment. Our trade payables were $9 million at the end of the quarter, and it's really related to a gold shipment that happened on March 31, as we had to pay the Peak Gold subsequent to quarter end. During the quarter, we made principal repayments of $13.8 million on the facility. And then subsequent to quarter end, we paid another $8.2 million, bringing the facility balance down to $30 million as of today. On the derivative liability, the hedge balance technically didn't change during the quarter. We had 86,000 ounces to start the quarter, and we also finished with that as a balance at the end of the quarter. Now because gold went up, the liability did increase. But I will highlight that we did do what's called a Carry Trade. And so we effectively locked in the April hedge price during the quarter. So we ended up selling that on April 30. And then finally, we have started delivering into the July hedges, and we have about 2,800 ounces delivered to those so far. And now I'll just hand it over to Rick.

Yes. Thanks, Mike. I think it's been a good quarter, and we'll actually start the second campaign, actually it started yesterday. So, that will be our May campaign. It will run roughly 30 days. And so we'll be looking to report on the total anticipated production from that once the campaign ends towards probably mid-June is roughly when it will end, and we'll have a bit of an update at that time on our -- won't be the gold sales, but it will be an estimate of gold produced. And then our Q2 results will probably be what in -- Mike, I'll let you comment on that, probably what? In July or August?

Yes, yes, early August.

So things are going well. I think basically, I can simply say that things are going a little better than planned. I think the total amount of gold produced was more than planned, roughly 30% for Q1. We do have that gold held in inventory. So we -- the campaign process the gold basically in the middle month of a quarter, it's not exactly in the middle month. So it will run over. And then the gold sales, obviously trail that by about 30 days roughly. So you'll have to just kind of keep that in mind, when you're reading our financials you'll see there's always probably be a golden inventory that's been produced, but not sold necessarily. So with that, maybe Romeo, I'll turn it back to you and we can start with Q&A.

Awesome. I do have a number of questions some of them already reflected in the chats. I'll meld them together where possible. Mike, I'm going to start with you -- I was curious, if you could give me a little more color around the carry trade and hedge delivery schedule. This reflects a comment on the chat, Wesley asks, hedges remaining. When are you liberated?

Yes, it's a good question and I get it a lot. It's really -- it's quite complicated but -- and we kind of changed our approach. We have been changing our approach in starting. And I guess, I'll just kind of start from the beginning, but the main challenge we have is you have your hedge delivery schedule, which is kind of once a quarter, we have a maturity date and that was kind of designed off the feasibility plan or study. And so what you kind of -- what actually happens though is, you end up having shipments every week, pretty much for the whole year, but chunkier ones in the middle campaigns. And so to manage -- to better manage cash, what we ended up moving towards is called the Carry Trade, so that we could effectively sell the gold at spot price, as the shipments occur and use those proceeds to basically pay the JV for the gold, and then wait for the distribution a month or so later and then use those extra proceeds to settle that hedge in cash, with our lenders. So it's a better cash management tool for us, with a relatively low cost. And it's basically, a cheap form of financing. So what actually happened in the quarter is, as you may recall, we ended up cash settling our January 31 hedge in December. So we effectively had no hedges matured during the quarter. But we did start producing in February. So, what we did is, we ended up delivering -- we basically -- set -- delivered 100% of the April hedge, into these carry trades during the quarter. So that was about 12,000 ounces of gold. So we started the quarter at 86,000 ounces of hedges. We finished the quarter with technically 86,000. But when you consider the carry trade, the hedge balance is just below 75,000. And then as of today, we're probably closer to 71,000 as we continue to deliver in July. Does that kind of answer your question?

Yes, that's great. I think that's useful extra color. So I appreciate it. One question, I got just for folks who don't know, and it's popped up in the chat a bit too. Where do the Onyx shares come from that are now worth that $5 million?

Yes. So when we acquired HighGold, they owned 5 million shares of Onyx, which was spun out of HighGold maybe 1.5 years ago. And so we had those on the books. I think when we acquired them they were probably valued around $500,000 or $600,000, finished the quarter at $900,000. And as of today, the shares are at about CAD 5 million. So those shares are now worth above CAD 5 million. So we thought we would just put it in the press release to highlight that there's another source of capital for us.

Somebody in the chat asked…

I'll just add in Romeo, I think Darwin and the team over at Onyx, they've got an interesting project. So we'll keep an eye on that. They just raise some more money to do some more drilling. So, I think it's definitely an asset on the books for us.

Some on the chat had asked just for clarity, is that stake now in available-for-sale security for contango?

There's some hooks on it with lockups. So it's -- but I think anything is possible, if we really wanted to, but we're on a...

Actually – I think I actually consider it in friendly hands.

There you go. Yes, I appreciate that. One question I got is, so on the PR can you discuss that dismissed lawsuit and what it means for both Manh Choh, but generally for Contango?

Yes I'll weigh in here. So we had -- as you may have known we certainly reported on the Citizens for Safe Communities, local anti-development group, anti-mining group in Fairbanks launched a lawsuit. It was trying to shut down the truck call program. And this has been pending for I think well over a year, it's been almost two years now. And they had originally for arguments that were before the court. The court dismissed three of the four. And this was the last one that the court had not dismissed, but there had been not really any sort of follow-through on the side of Citizens for Safe Communities. So, we learned a little bit ago that they were considering dropping the lawsuit. And apparently, you can't just drop a lawsuit. You have to come to a settlement. And so that took, I don't know a little over a month, maybe two months somewhere in that time frame, for them to settle without prejudice. So, it's gone. I think this – obviously, it's a good thing for the project and for the Manh Choh project. But it's also I think a good thing for mining in general, because if you can't have people anti-mining groups that are – that don't want trucking of ore that means you can't track concentrates and maybe you can't track this or that that's servicing the mine. So I think it's good that this has gone away and I think it's good not just for our project but also for mining in general in Alaska.

Great. I appreciate that extra flavor. One question I had is what will the balance be on the facility by the end of the year?

The facility will finish the year around $15 million just under.

Great. I appreciate that. What I also want to say obviously congratulations on beating quarterly guidance that's really impressive. You mentioned the PR incremental improvements in – or transportation and processing at Fort Knox. And I know Mike, you alluded to it for sure but what helps get that significantly lower ASIC of 13 74 versus the target of 16 25?

You want me to start on this and then Rick you can...

Yes. Yes. Go ahead, Mike, and I'll weigh in my Fort...

I'll let you talk about the incremental improvements. I'll just comment on our guidance remaining at 16 25 for ASIC. And the main driver is that is there is going to be more sustaining capital during the quarter. There wasn't a lot in Q1 and there's also going to be an exploration drill program. So the cost basic will go up as a result of that. And so that's what's kind of driving the increase. And so – and we did produce more gold in Q1 and I do expect we'll have strong Q1, Q2 and Q3 and then in Q4, I think there's a little less production in that period. And so when you smash those all together you're going to end up with around $1600. And we still hope to beat that but we still think that's a reasonable estimate.

Great. Yes. So on the incremental improvements. I think starting with the bridge rate restrictions are still in place. So that's still part of the day-to-day truck-hauling. The improvements are really all about water and whether it's frozen water in the wintertime. And obviously, Q1 reflects wintertime operations and they were basically just knocking the snow and ice off the trucks. When they come down the hill from where the Manh Choh mine is Manh Choh is up on top of a hill and then basically there's a 20-mile road that connects it to the Alaska Highway. And that's where most of the snow and ice is picked up is along that – it's a mine access road basically, not a paint highway. So at the end of that they had some come guards put in there that was knocking some of the ice and snow off and then they literally just run around with a big sledge hammer and knock it off, before they got onto the highway. Once you're on the highway you don't pick up a lot of ice and snow, unless it happens to be snowing but it's interior Alaska so you just really don't get a lot of snow. So that was one – that's been one incremental improvement. The moisture content of the ore is another one. Obviously in the wintertime it's – things are frozen, so you don't pick up a lot of moisture. And in the summertime, which we're obviously operating now. It's mud that you pick up. And so they've established some wash plants truck wash stations basically just before they get on the highway as well. So those are all the incremental things. I guess the other one was that will come into effect for the summertime is that we – in the pit, I think there's just more water management in the pit to keep the water away from where you're mining and keep the water away from where your stockpiling. Last year was a start-up year. And I think people sometimes forget that this was not your normal mine sequencing of feeding stuff right into the mill right away. It goes into a stockpile and then it gets transported and stockpiled at the Fort Knox facility. And so it was a candidate – in that sense it was a bit of a long start-up from sort of turning on the mill and figuring out how that works. But even the mill typically has a three to six-month start-up plan. So anyway, long story short is you learn from as you're operating you learn where things are going right, you learn where things are going wrong and then you put in make changes to make incremental improvements. And so that's exactly what's happened. And it obviously reflects in producing more gold and at lower cost than guidance. So I think it's all been very positive.

Great. I got one more on just general strategy before I jump into a quick Johnson Tract question. I'm curious what gold price is obviously significantly increasing during Q1? How does container balance the benefits of spot prices against hedge obligations? Are there any potential adjustments to the hedging strategy or where your head's at?

That's definitely my question. That's not one I really want to -- we look at this obviously a lot. We're currently selling 30% of the gold in -- at effectively spot price for the year, 70 into the hedges. You can try to get cute and look at swapping out hedges for gold prepays. And at the end of the day, you're kind of getting to the same result, but just a different look. So I guess my focus right now and I won't speak for Rick, but I think just continuing to deliver into these hedges get ahead of them as much as we can, try to just manage the carry trades and just trying to keep that 70-30 ratio as we deliver this year and make sure that we're ahead of schedule by the time we get to the end of the year. And we'll finish the year with about 43,000 ounces in the hedges. Our debt will be down to $15 million. I think this will be less of a concern by the time we get to the end of the year and demonstrate another solid year of production. And they won't -- just won't be as significant on our balance sheet. Rick, anything you want to add to that?

Yes. I'll just say I don't -- we're a junior producer. I don't think we want to get cute with betting on gold. I don't think that would be good for our shareholders. I don't think that's what our shareholders want us to do. I think they want us to -- look the hedges are in place because that's the only way you could raise money two or three years ago when the equity markets were pretty much dead. So it's part of the DNA of the company. And as Mike says, we'll just keep paying down the debt and keep delivering to the hedges. Let's not be cute here and make a big bet on gold going up and it goes down and then you're in a worse spot, so just kind of businesses as usual. And I think we'll be in a good spot. I think we are in a good spot, but I think we'll be obviously in a better spot when we're unhedged. So, that will come soon enough.

Liberated as they say in the comments.

Liberated.

Yes. So I want to pivot to Johnson Tract for a quick second because I know we talked about it recently, but I really do want to emphasize really impressive NPV of over $400 million of current gold prices. So I'm curious, as your folks in the room, what are the next key milestones in developing Johnson Tract? And more specifically, what's the time line for permitting that underground access tunnel?

Yes. So permitting is not the sexy part of the story for sure. But that is the next stage for Johnson Tract. That's why we wanted to put the get the initial assessment out. I keep -- I just don't keep one to call it a PEA, but do assessment out. To let people know that this is a pretty valuable asset. But as we said, the next stage is permitting the tunnel and that's a sustainable Alaska mine operating permit is technically a mine when you're starting to drive the tunnel, you're not producing more necessarily, but you are mining you're under ocean and said all those things. So, we think that will take about a year. It's a state permit. There's no specific federal permitting involved. We already have the access road between camp and the proposed tunnel site permitted. So we could build that at any time, but it doesn't really make sense to spend money that building a road less having it sit there. So we'll get the permits. We think that will take about a year. At the same time, we're permitting the easement and barge landing site that have been granted to CIRI by the federal government. So it's -- when you grant an easement typically that means you're already permitted. So, it's just the special arrangement that CIRI has with the federal government that they were granted the easements, so we have to figure out exactly what the road alignment is. And so you go through sort of the normal permitting parameters. In this case, one of the driving ones is wetlands for your Wetlands 404 permit. And there is to minimize impacts to Wetlands. The other things that you're paying attention to just as a responsible miner and constructing roses to minimize impact to model and fish specifically. So face passages and making sure that all the -- any stream that has fish-bearing fish or fish bearing steam at the fish can go back and forth across the river or across the water underneath the road. Barge landing site. I think in general, we've selected the best area for that. We've got to do more work, specifically on where that's going to go in the specific design there. We'll be doing work in trusted panel, specifically to study where the Blue Whales are where they hang out? And do they use the channel? Are they north of it? Are they south of it? We know they're generally in the area and they aren't in dangerous species. So that's obviously, a very important thing for us to understand more. So we'll be doing work on that this summer as well. And so this year's focus in terms of the road access down to the bar ringside and then just to cover off it's about a 20-mile road length, which is almost exactly what Manh Choh is, so it's just very similar scale. So we'll gather all the information this year, and then we can start permitting those formally next year.

Awesome. I appreciate the JT update, of course. I got one last question that I know you kind of answered, but I just want to keep it clear before we jump into the million questions from the audience. With -- you got strengthened cash position reduced debt what are the in priorities for the remainder of this year?

I think, Mike kind of covered it keep paying the debt down keep delivering into the hedges. We're going to review our budget here shortly. Next week, Mike and I'll be sitting across the room from each other and we can take a look at. Do we have money enough to look at drill program at lucky shot this year? I'd like to, but I also want to be prudent and make sure we've got plenty of cash in the bank to do with the main businesses here get Johnson Tract permitted and deliver into the hedges, and pay the debt down. There's a few other things that we can look at, but I think those are the main order main business for right now.

Awesome. Going to jump into the chat. We covered some of it, but there's a lot of questions so bear with me. I'm going to run through as many as I can. We've covered this a bit, but Jan asks where is the next likely drilling for Contango going to be?

I'd say, probably, definitely lucky shot. I think, if we don't get a drill program going this year I'm very confident, we'll be drilling next year. We're all set up. The underground is permitted there. So it is technically a mine. We have it currently on care and maintenance, but we are caring and maintaining it. So that's my best guess. I mean, I'm saying, this is separate from Manh Choh. We've got -- I think it's a $5.7 million joint venture program at Manh Choh. And the focus of that drilling is to is to evaluate targets in and around the current pit. They'll be doing a bit of work further a field. But I think the lion's share of the exploration program is in and around the pit there. Obviously, the pit feasibility level pit was done at, I think $1,450 gold. Gold is almost $2,000 more. So I don't think -- it will be very unusual to me to see that that pit doesn't get a little bit bigger go a little deeper and a little bit more just go after some of the stuff that obviously didn't make it into the paid at a $1,400 gold price. So I think we'll -- we won't have results until later in the year. And I don't believe, we'll be in a position with that $5.7 million budget to upgrade a resource. But if we find some interesting things, I think we'll more than likely continue to focus the effort there going forward.

Great. On that exact syntonic from the chat, Tate from the Max Group asks of that $5.7 million is it taken out of your share of sales in the JV? Or do you write a separate check?

I'll let Mike answer too, but it's all part of the -- an annual budget. That's approved. And then the cash sweeps basically that's included in -- before we get a dividend, I guess is the way I would put it.

Yeah. And so right now, we're guided to getting about $80 million in cash distributions from the JV this year for our 30%. That's done at about $2,800 gold. So that includes kind of our 30% that $5.7 million program.

Great. Thanks. T. Decker [ph] from the chat asks internal question. Why is the increase in shorts who are these guys? That's an interesting question.

The shorts, we love the shorts. I don't want to see him hang, but that's another topic. Short answer is I mean there -- look I mean the -- I think this is all speculation on my part and Mike, if I were across, I mean Mike be kicking me. But look we were -- we got hammered last November with the reduced amount of gold production and the increased cost from what the feasibility said again, the feasibility is three years old now. So I think that's where these things started. I think there was an effort to -- once we were down lower. I think there was an effort to boot is off the Russell. So I think that's been some downward continued short shorting the stock to boot us off of Russell and then that's one million shares that the Russell has to sell. I think that's gone away from them in the sense that our share price has gone up because we've performed better than guidance and we continue to deliver more gold than planned and at lower costs. And I think the other direction is I think the Trump tariff discussions have gone against the Russell valuation then the Russell has gone down. So while the Russell has gone down, we've gone up on a relative basis, which means that lower threshold on the Russell is lower than us being on the cost sort of thing. So I think the shorts are in trouble and I think today is a good demonstration of that.

Here you go. Somebody in the chat said a short squeeze would be lovely. Do we all agree? There you go. Even in the chat says. Congratulations on a fantastic quarter looking for a small bit of clarification on something from the last call. I suggested that you'd finance Johnson Tract with bank debt and free cash flow so long as gold prices remain robust just making sure that that's accurate.

Sorry, you just came in a bit broken there Romeo can you repeat that?

All good. I was just curious on Johnson Tract. I mentioned that last event you suggested you'd finance a project with bank debt and free cash flow so long as gold prices remain high, just making sure that that's accurate.

Yeah. I think so I mean look we're a couple of years away from that decision. So -- and just to go through it. So this year permitting the tunnel, hopefully next year starting to think about building the tunnel. And then it's a year to build a tunnel, a year to get the underground drilling in place and completed in a mine plan around. So just straight up, it's at least three years away. So we've got time. When I sort of fast forward three years from now, we will no longer be hedged. We will have -- we'll have 0 debt. So -- which means we could take on more debt and we'll be producing in the neighborhood of 60 -- continue to be producing in the neighborhood of 60,000 ounces of gold a year out of Manh Choh. So with that sort of as a leader and an assumption, we'd be in a good place to debt finance the balance of the -- building the road in the barge landing facility in there. And again, using the DSO model, you're not building a mill in the tailings facility and all that. Now as I mentioned, we may go buy one. And that's something we'll continue to take a look at. We'll look at opportunities to do a DSO direct shipping or model to Asia that might be an alternative. It is an alternative for us to evaluate. But there are at least three or four other mills to have discussions with them. And those discussions are taking place. We're not in a hurry here. We want to make the right decisions. I kind of like the idea of owning a mill and applying the DSO model with a sort of a hub-and-spoke twist if you will, delivering our own ore to that mill, but maybe finding some other advanced stage projects that might supplement them and extend the mine life or great ways will displace grade. So if we can find something better out there, we'll certainly go with that. But I do expect to find a lot of things that are much better than Johnson Tract and it's an awesomely good project from a mining standpoint simple and good grade.

One question from the chat. What gives you personally confidence that Manh Choh life of mine can be extended beyond 2029?

Yeah. I think just kind of repeating what I said before, but again, the feasibility study pit and I can't remember it was 14 or 14.50, but it was one of those two numbers at the bottom of the was run on. And our costs have not gone up dramatically. I think our life of mine cost is going to remain 1,400. This year is going to be a bit of a high year. As Mike said, we're buying some more tractors, the trucks or they call them tractors is pulling part of the truck and trailer assemblage. So we'll be buying some more of those this year. And we also have a -- this is a higher stripping year than average. And this year and next year are much higher than average, and then they go down. So I think we'll continue to see very strong cash flows out of Manh Choh for the next four years. And if gold prices are in the neighborhood of where they are, we're going to make a hell of a lot of free cash flow. So we're in a very strong position. I mean, we only have 12 million shares outstanding. So when you do this on a cash flow per share basis it's -- I don't see anybody else that's our near neighbor.

That's healthy. Now as I promised I'm only going to do one bridge question for webinars. So I'm going to combine a few bridge questions into one. Because you mentioned that it's already there is still the restriction. But is there a chance to wait restriction will be resolved with the states in a time frame you can comment on?

Yes. I think the -- what I can say is that the current plan now that the annual, or the Department of Transportation budget has been approved by the federal government with the matching funds and all that. As I understand, it's scheduled to be repaired and -- I shouldn't say repairs it's not really broken but just updated the bridge updates that were planned can now be taken place -- that take place a year later than the original plan but that would be in 2026.

Great. One question is when the bank debt's paid off is Contango able to authorize a small let's say $10 million repurchase?

Yeah. It's talking about the buyback program. Rick?

Yeah. Sorry, yeah.

One question just about company marketing. Is there anything to look forward to in regards to sell-side coverage roadshows, et cetera in the near future?

Yeah. So next week we're actually headed to Las Vegas for the Canaccord Genuity conference. I think we've got over 20 meetings already set up, and that's largely an institutional investors are attending that. So that will be a good one. It goes quiet in most of June and July are quiet and then on August. And then we'll start with Beaver Creek that, sort of, the start of the road show season if you will for between now and the end of the year. It starts with the Beaver Creek conference will be at the Denver Gold Show in Colorado City, or Colorado Spring sorry. And then I think we've got a few other things. And I think we end the year. We've got some marketing in Europe that we're doing. And then we ended the year, I think with the New Orleans conference.

So yeah we'll be on the road quite a bit this -- starting in September. There'll be definitely the summer hiatus for sure.

And racking up miles from Beaver Creek through the end of the year?

Yes exactly…

We have a question from the chat, any plans to initiate dividend?

No, really no. Again the main order business is paying off the debt and delivering the hedges. I think that's got to be our stick to that ticker knitting in that basic plan. Share buybacks are interesting. It's another form of compensating your shareholders. So those are the things that we'll be thinking about.

Right. I got two tough questions to answer. So do answer the best of your ability. One is the eternal. What do you think the stock is worth?

I don't think we're supposed to say that. Can we, Mike?

You're going to do what you want to do, so.

More than $15. How is that?

There you go. Good answer. And Jan asked another, I think impossible to answer question. Are there any active takeover bids for Contango right now?

Yeah. Short answer is not aware of any.

Great. What CIRI's stake in Johnson Tracts?

I didn't – sorry, I didn't understand the question.

What's CIRI's stake in Johnson Tracts?.

CIRI? Okay. So CIRI, they're the landowner. So they are -- they own the mineral and the surface rights on the track that deposit is low, current resource is located on. And they have these special rights with the federal government with regards to access, which is why they've already been granted the easement for the road access to the coast and for a barge facility or port facilities, it's actually technically what is described as. So those are the basic arrangement that we have with CIRI. They do have a right to participate as an equity owner in the project. And I'm sure we'll be having that discussion at some point. But I think that's probably a year away probably.

And they have royalties.

Yes. Sorry. The royalties, as a landlord they have royalties, yes.

Great. One really specific question about Johnson Tract. What happens if you come across archeological sites while you're exploring the project?

It's actually a big part of what I'll call permitting. It is an assessment of the archeological or cultural sites. And obviously, that's something that we work closely with CIRI on. Again it's their land. It's their traditional land. So -- but basically, there's a set protocol for evaluating the access route, the easement if you will, and it's managed overseen by what we refer to as ship which is a state historical remember what the [indiscernible] stand for office. But there -- so that's a group that sort of manages historical and cultural things a bit of importance. But more important than ship frankly is CIRI. It's their land and it's their traditional and cultural heritage. So that's a driver for us. And those -- that will be the driver for the evaluation of where the best place to put that road is. Short answer is if you find CIRI, and you had the kind of realize where this CIRI is, it's not on a main trading route or anything for -- and CIRI has told us this. So it's -- the coastal areas are probably where most people would have been but certainly up at the mine site it's definitely out of the way and you're right up next to the very, very steep mountains. So you're not going to find an old village up there or something like that. So -- but that's -- it's a big part of the permitting effort for sure.

I appreciate that. That's useful info. I know we're not just over time but coming up on our hard stop. So I got two more questions that I'll throw it to. One person from the chat asks will the derivative liability be declining by approximately $20 million a quarter for the rest of the year.

I think that's a little higher. I think when I looked at the April 30 hedge, I think that represents about $13 million and that was about 12,000 ounces. So I think if gold stayed where it is, our hedge liability should be cut in half by the end of the year. So that's about $50 million for the year. And then it will gradually go down from there.

Great. Thanks. One last one from Roger. You notice no public options are available for Contango. Do you expect to have options available in the near term?

We don't -- I mean the option market, it's an independent thing, right? It's not something we control. And we don't issue options to employees. So yes, that's why there aren't any options. There we have some warrants but they -- and I don't know - do you know Mike if they trade?

No, I'm not -- I don't believe they do at all, they do.

There aren't that many of them. So the problem is probably one reason why they don't want to [indiscernible]

There's about 700,000 then they're all pretty far out of the money and they have about two years left.

Great. Just going to point to a couple of comments on the chat. People said, what a balance sheet transformation, keep up the good work. So I appreciate your time Rick and Mike. Thanks so much for joining us and talking to folks and answering our questions. I really appreciate it very much, and hope to talk to you soon as we have more updates. Thank you.

Thanks Romeo. Good afternoon to you. Take care.

Have a good afternoon, guys.