Contango Ore, Inc. (CTGO) Q2 2025 Earnings Report, Transcript and Summary

[Audio Gap] depending on where in the world you're signing in from. I saw today we got all the way from Alaska to Australia. So I'm happy to say the sun never sets on this webinar, which is always nice. I've got with me today, Rick Van Nieuwenhuyse, CEO of Contango Ore; and the company's CFO, Mike Clark. Gentlemen, how are you today?

Good morning, Romeo. How are you going?

Good. Good. So here's how today is going to work for everybody that's in the room. First, I'm going to throw it to Rick just to recap their recent news. Then I've got some questions that I'm going to ask both the executives, but then I'm going to throw it to the live audience today for questions that you have. So this is an interactive event. That chat button in the bottom of your screen, you can use it at any point during today's event to ask Rick and Mike any questions that you might have. I'll try to get to as many as possible. If for whatever reason I don't get to your question, I'll make sure the Contango team gets to it, and they'll get back to you as soon as possible. The only other piece of the housekeeping is that today's event is being recorded, and the replay will be available late this afternoon Eastern Time. It should come right in your inbox, but also be available on 6ix' YouTube channel. So I will throw it to start off to get the protein of today's event with Rick.

Romeo, thanks, and thanks, everybody, for joining us for a review of our Q2 financials. It was a great quarter. Operating earnings were $23 million, net income of about $16 million. I'm really proud of our cash costs, seeing those being well under guidance. Cash costs for the quarter were $1,416; for the year, $1,375. Our all-in sustaining costs, $1,548 for the quarter and $1,462 year-to-date. We'll talk about JT. We're focused on permitting there. This is a Johnson Tract project. That's going well. Very, very pleased with the progress we're making there. Lucky Shot is still on hold, but we are looking at getting a drill program going there. We can -- we'll talk more about that with some of the Q&A, I think. And again, as we're kind of on a steady path here, focus paying down debt, delivering the hedges. And today, actually our third campaign of processing ore at the Fort Knox mill starts. There's about 250,000 tonnes, 0.25 million tonnes on the pad at Fort Knox, and it grades about 0.023 -- 0.23 ounces per ton, which is about 7 grams. So just with that sort of overview, happy to just jump into the question from you.

Awesome. Well, I got a bunch, so bear with me while I grill you guys for a little bit. I do want to start with the numbers that kind of jumped right off the page for me. So obviously, you went from $3.1 million operating loss in Q2 of last year to $23 million operating income this quarter. Always nice to see. Most mining companies I talk to don't see money, so it's always nice to see that. In addition, the company had a net loss in Q2 of last year of $18.5 million, now net income of $15.9 million. So beyond, obviously, increased gold production, what initiatives are contributing here? What's making that big change?

Well, as you say, it's not common to see a junior company and even a junior producing company making more money than its spending. And so it's definitely a sea change in terms of how -- I think how we're viewed by the market. We were -- I was actually wearing a shirt the other day, it was from our -- when the groundbreaking ceremony from August 29, 2023. So we've been mining now at Manh Choh for 2 years, close to and been in production. We started production, of course, in July of last year. So we're kind of up on step in terms of if you drive a boat, the ultimate way to get a boat operating smoothly is to get up on step. And that's kind of the way I feel the project is now. The mining has been very smooth and on plan, on schedule, on budget. The ore transport has gone, I think, better than planned in terms of not as many shutdown days due to weather and things like that. The lawsuite's gone away. So the last part -- piece of the puzzle is running the ore through the mill, and they just continue to make nice improvements, and we're averaging 92%, 93% recovery, which is very respectable. We're maintaining that mix of oxide sulfide ore 2:1 ratio, and that keeps the recoveries in the plus 90%, which is, again, very respectable. That means you're pouring gold and you're making money and nice to see the all-in sustaining costs coming in well under guidance. And that's -- obviously, the lower the all-in sustaining costs are the higher the margin on the realized price of gold. So Mike, maybe you want to maybe comment from your perspective?

Yes. No, that was a good explanation. I think just -- yes, on the income from operations, they weren't in production in the first half of 2024, whereas we were in production here. So that's purely driven by production. I think the net income has increased for 2 reasons. Last year, we were in a continually increasing gold price environment. So you kind of always had these unrealized losses on your hedges, so your derivative contracts, which kept increasing our losses during the period. In addition, we also -- and that stabilized during this quarter. So you didn't really see that happen. We just kind of recognize the recognized portion from delivering the hedges. So no real unrealized portion. In addition to that, we did have a $6.4 million gain on our Onyx shares that we recognized in the quarter. So those 5 million shares we acquired as part of the HighGold acquisition. So those kind of hit the net income this quarter.

Great. While I'm on with you, Mike, actually, I know earnings per share jumped from a loss of $1.90 to a profit of $1.24 per diluted share. And it looks like $3,274 per ounce realized spot price versus that blended carry trade of $2,441. So I'm curious if you can just like looking for some color on your pricing strategy and how that contributed to the bottom line this quarter.

Yes. Well, the hedging strategy, for the most part, is just delivering to the hedges. And so if you deliver effectively about 70% of our gold goes into the hedges, 30% goes into -- we sell at spot price during the year. And so when you look at the average gold price during the quarter, let's just say it was $3,300 and our hedge price is $2,000, you kind of end up with a blended price of about $2,450. The carry trade we brought in this year, which just helps us manage our cash flows so that when we receive our deliveries of gold from the Peak Gold JV, we can turn around and sell it at spot price -- at 100% of the spot price, pay the Peak Gold for that gold, which comes at a slight discount, which is why you see about $1 million gain on metal sales each quarter. That's a slight gain we make. So we sell that gold at spot price, the banks effectively fund that difference between the $3,300 and the $2,000. And then when the hedge delivery date comes up in the next quarter, we then can deliver into the -- we basically settle that hedge right then. So it allows us to conserve our cash. In Q1, we made -- there was a rising gold price, we actually saved a couple of million dollars by doing that carry trade. I think in this quarter, it cost us a couple of hundred thousand dollars. But it basically ensures we take no risk on the gold price moving in either direction where it limits any exposure because what we don't want to have is the gold price, we sell it at, say, $3,000 and that when we have to deliver or settle that hedge, it's at $3,500. We're at $500 an ounce, and that could put us in a really tricky position. So this just manages risk and that slight difference gives us about $1 million gain per quarter.

Okay. Makes sense. I want to get into operational details real quick. So Rick, I'll throw it to you. I know this third campaign is processing 250,000 tons at 0.23 ounces per ton, which for the metric folks in the audience, 7 grams per ton grade. So I'm curious, how does this compare to your Q2 performance of 255,000 tons at 0.22? And what's driving that grade consistency at Manh Choh? Where does that come from?

Yes. So -- and it really is -- I think I mentioned it earlier, this -- the mill likes to run with this 2/3, 1/3 ratio of oxide to sulfide. And oxide ores are easier to process. They just consume less consumables and things like that. So as you add -- as you get deeper in the ore body, you're adding more and more sulfide. But we've got a big low-grade stockpile that we can -- of oxide that we can kind of keep feeding in there. So that's what's kind of driving the grade. Now we are in the process, and I'm using the Royal we here, Kinross again, is a manager and it's their mill. But they're in the process of adding an oxygen sparging circuit to the cyanide leach tanks. And what oxygen is just kind of -- it acts as a bit of a catalyst to help the reactions go. The sulfide ore is a very good performing sulfide ore in terms of extracting the gold from the cyanide solution. It's not the least bit refractory. But sulfides do consume more consumables. And so the oxygen just helps get that going. And so they're putting an oxygen sparging system in place, which I think should be up and running by the end of the year, and I think ready to sort of put into the performance. As we get deeper in the ore body and we have more and more sulfide, at some point we're not going to maintain that 2:1 ratio and -- as you deplete the oxide. So that's kind of operationally what's going on. And so there's a bit of capital, obviously, to put the oxygen system in place and some of that is showing up in the capital expenditures. And then the other part of the operational thing is these trucks have -- the trucks hauling the ore have over 1 million miles on them now. So we have to start replacing them. And it's amazing after a year -- a couple of years of mining operation, you're starting to replace your trucks. But those are things that show up in the all- in sustaining costs because they're capital that are spent on operations. So I don't know, Mike, if you have anything to add to that.

No, that's how I would explain it.

Perfect. I want to get into cash flow and capital allocation for a second. So I know generating $36.9 million in operating cash flow for the first half versus $6.9 million last year. But with $30 million in Q2 distributions from Peak Gold, $54 million year-to-date, how are you guys balancing debt reduction? I know you paid down $29 million so far. But what's the plan on debt reduction versus reinvestment in growth projects? Just looking to get your head on that.

I'll let Mike go first, and I might throw in after.

Yes. Well, my focus is ensuring I can always meet those delivery dates so that the debt comes every quarter, hedge deliveries every quarter. So my -- the focus right now is we make -- we have sufficient capital to ensure that we can make all those payments through the maturity with -- currently for 2025, there's some extra cash we had this year, and our focus has been on the permitting at JT. So with what we're anticipating, which I expect we'll probably do slightly better, we're going to bring our debt down from where it currently is at about $23 million today. We'll finish the year around $15 million of debt with ING and Macquarie. And then our hedge position is currently at -- as of today is just under 63,000 ounces, and we should bring that down by another 20,000 ounces to about 43,000 by the end of the year. So that's the main focus of the proceeds we have, which is where the majority of cash goes, but we do keep a little bit aside for other projects. And I'll pass it to Rick.

Yes. I'll just kind of comment from an operational standpoint. We do want to advance our other projects. I think we've said very consistently that the next stage for JT is getting the permit to go underground. And that's -- there's not really anything to do. We want to spend exploration dollars on early stage, relatively early-stage projects to add more ounces. We know we have a high-quality deposit that makes a lot of money that has very high NPV at today's gold price. There's -- it's just not prudent to start or restart exploring the Ellis Zone or a number of the other or any of these other targets that are out there. We know we've got a very prospective piece of ground at JT. So next stage, get the permits. That's going very smoothly. We have a good working relationship with the state of Alaska. These permits, the underground mining permit, is at the state of Alaska. Technically, it's sort of 2 main permits we need from the Department of Environmental Conservation, and that's a water discharge permit and then the mine operating work. Technically, it's a mine. We're not producing anything, but you're still filling a big hole in the ground, a long hole in the ground. So that's the focus at JT. And look, at Lucky Shot, we do want to get a program going and get back underground and start drilling again, but I don't want to do it in sort of fits and spurts. And so that's why we keep saying that the focus is on delivering the hedges, reducing the debt. And when we see sort of a clear window of being able to start and then not stop going at JT -- sorry, at Lucky Shot that's kind of what we're looking for. So be patient, it's not steam. The gold is not going anywhere. Gold price keeps going up. So we're -- once we get underground and get to it at Lucky Shot, we can advance things pretty quickly. So I'm not really too worried about the overall time line there.

Great. I got 2 quick questions on -- while we're on the topic of Johnson Tract and Lucky Shot. For Johnson Tract, thanks for going through the upcoming milestones. I think that's great. What tonnage potential are you targeting at Johnson Tract?

So we -- the initial assessment we did, which is, again, the term S-K 1300 uses same as the 43-101 in Canadian Lingo, targeted a 1,500 ton a day operation, which is -- it's a -- JT, I mean it's a good grade deposit, but it's also just a nice geometry of the deposit from a mining standpoint. It's a pain in the butt to drill because it's -- you got the mountain that's going straight up and the ore deposit that's going straight down. So your drill holes get long and the dip is such that you have to drill parallel to the mountain surface, that's not a good thing to do. So that's -- from an exploration standpoint, it's not the greatest geometry, but from a mining standpoint, once you're underground, it's a great geometry because it's a big fat ore body and it's near vertical. So you have -- from an underground mining perspective, relatively -- you've got good long-hole stopes that you can develop. And all of our infrastructure is in unmineralized material, what we call the dacite porphyry. It has like 0 sulfides in it. And so it's great rock to put all your underground development in because the water stays clean. The big fault that separates the mineralized from the unmineralized is an aquitard or aquiclude. So the water -- mineralized water that is tainted stays on one side and you just keep the water separate. You put a curtain up if you need to and you can develop the ore body from an environmental standpoint very cleanly and not have a lot of concerns about water contamination. Mother nature is doing that on her own right now. That's how we find these deposits. They're metal anomalies, which means there's metal going into the creeks. We just don't want to touch it because once we touch it, it's our water.

Fair enough. Fair enough. I got one question about Lucky Shot as well. I noticed you mentioned a royalty acquisition of an existing 0.5% NSR for 250,000. Just what does this mean for me and the folks in the room?

Yes. So as we work towards transitioning Lucky Shot from an exploration project to a mine, and that's getting the drilling done. But obviously, we see that as all moving forward when we get the right time and that will be let's get the hedges out of the way and things like that. This is -- if we can buy a royalty for a good value, that means we don't have to pay it to -- when we're in production, we don't have to pay that royalty to somebody. So it's pretty valuable to have that, and we'll basically just extinguish it because we'll own it. So there's no sense in paying it to ourselves. That's just paperwork. Mike's got plenty of that. So don't read it as we're becoming a royalty company sort of thing. That's not the intent. it's just if we can buy out the underlying royalty owners and pay them a good value, good value for them because they get the money upfront. They don't have to worry about any of the ongoing risk, the operational risk and what have you. That just makes sense to us.

Great. While we're on Mike's paperwork, actually, I do have a question for you. I'll talk about carry trade mechanics. So I know you reduced your hedge book from 74,800 to 62,900 ounces or somewhere around there. Curious, what's your philosophy on the optimal hedge ratio as production progresses?

Well, the optimal hedge ratio doesn't really change. It all mirrors what was in the original feasibility study, and that's how the lender structured it. And unfortunate for us is it got structured in a way that it does things in quarterly -- on a quarterly basis, but we don't deliver gold on a quarterly basis. We deliver it on a weekly basis, if anything. Some weeks are bigger while we're in the middle of a campaign, whereas some are smaller, but there's a delivery every week. So the objective I try to do to, again, limit risk, ensure that I have enough gold by the time that delivery is due is when a campaign starts, you kind of have some -- you have a couple of weeks when it starts where you're waiting for that first big shipment. But when that first shipment comes, we deliver 100% of that gold into the carry trade and that carry trade will finish -- we will fill that next hedge delivery up within the first 3 shipments usually. And then for the final 2 shipments, I'll just sell those at 100% of spot price with no carry trade. So we're always ahead of the hedge delivery. And in a rising market, it works well, obviously. But if the gold price kind of starts to dip, there's a small hit. But this just ensures we're never going to be short delivering that gold and forced to buy it in the open market at a month later when gold price could swing again. So that's kind of my approach, right or wrong, I guess, but it's worked so far.

And the objective is to deliver the hedges and have full exposure to the upside or downside. I mean, obviously, what we don't want to do as a junior company is try to play or game the market on guessing where gold is going. That's just not the role of a junior mining company. And equity owners of Contango shouldn't want us to make bets, I mean go to Vegas...

Yes. When we have a stronger balance sheet, Romeo, we would take a more sophisticated approach to this. But while we're at these levels and managing the lenders, it's all about just removing the risk and trying not to take any big swings for the fences at the cost of being wrong.

Yes. No, I appreciate your take on that. Rick, I'm hoping -- and I know there's a lot of questions in the chat, I'll get to them just in a second. I want to zoom out for a second. With $58.2 million in Q2 gold revenue, you've emerged as a mid-tier gold producer. And I'm curious how you see Contango in that class compared to other mid-tier gold producers, especially with rate cuts supporting -- or potential rate cuts supporting higher gold prices. Where do you see Contango fitting in with the club?

Well, we're a junior company. I'm not sure we're mid-tier yet. I would actually describe us as a junior producer. But we're -- again, we're making more money than we're spending. And that's unique. If you look at most other junior producers, that's not the case. And that's delivering into our hedges. And so once we get free of the hedges, this is a rocket ship. So that's -- and that's where we're aiming to. We're going to do that prudently. And again, we're not going to -- as Mike just said, we're not going to swing from the fences and make any big bets here. But we do believe in the gold price. If you don't, you shouldn't be in the gold business. And we're hedged because the banks made us to hedge, it wasn't part of the strategy. And so -- and that's just the way it works for a junior company. I think in terms of where do we fit in the gold space, I can't think of another junior company producing and making money selling gold that only has 12 million shares outstanding. So we're definitely a bit of a unique beast. Our model is unique. We see a few other want to be copycats out there saying they're going to do a DSO thing. And I think it's a great model. So hats off and if they can make it work, that's great. We've made it work. So we know it works. And it's really all about the assets. I mean the assets have those 3 criteria that we talked about. They got to have grade. They got to be close to infrastructure, so you don't have a huge amount of capital to get it done. And they've got to be relatively simple projects from a permitting standpoint, so you can get them done quickly. Obviously, because of that, then the capital is not as high as if you were going to build your own mill and all that. When I look back at Manh Choh and we had a study that said basically, it was going to cost $500 million to build our own mill and develop the project there. And the market just doesn't support that. It just -- it's just too small a deposit, even as high quality as it. It's high quality, but it's just -- it's too small for the market to say, well, we're willing to risk $500 million of ours, whether it's debt or equity, to let a junior startup make a try to get this into production. There's more belief if you have a 5 million or 10 million ounce deposit, that will eventually work because frankly, if it doesn't, one of the intermediates or majors will come along and fix it after it's got down to the trash heap.

That is usually how they operate.

And I mean the market is littered with junior want to be start-ups that said we're going to develop our 10 million ounce gold deposit and they don't, maybe Newmont or Barrick does eventually or somebody else. But yes, we don't want to be one of those. So we're going to stay prudent. And we like our low share count. We've been told several times we should just roll it forward 10:1 or something like that and be happy with a $2 stock. And no, my objective is I'd like to have a 3-digit stock price someday.

And somebody in the chat actually agrees with you. They posted near the beginning of the hour they see the stock at $100, So to say they're printing money, the model is brilliant. So somebody in the chat agrees with you. Curious, as we jump just before I get to those chat questions, when are you going to provide guidance on the 2026 production at Manh Choh? And just generally, what's -- what are the upcoming catalysts for Contango?

Yes. So guidance on '26, typically, the plan and budget is approved in November time frame. So we won't really see anything definitive other than the general life of mine kind of guidance that we also give out. But -- and I think it's -- we're going to stick to the plan. And this is Kinross. Kinross, they don't swing for the fences either. They're going to keep it on the straight and narrow. Look, I mean, the mining is going smoothly, the hauling is going smoothly and the mills dialed in. So steady as they go. Fort Knox has never looked better as an operation from Kinross' perspective on their financial disclosures. So if they're happy, we're happy.

Here we go. Perfect. Let me get into some of the questions in the chat. So Tate Sullivan right at the beginning of the hour asked how long will Campaign 3 last and potential timing of the check from the JV?

So campaign is roughly 3 weeks. And Mike, you probably ought to comment on when...

Yes. I would expect that distribution should come in late September is my best guess. It's usually kind of right near the end of the campaign when they're 89% done.

Great. CW Donahue from the chat asks, for Johnson Tract, is there still a Beluga whale lawsuit issue? Where is the status of that?

Yes. So the Center for Biodiversity and Cook Inletkeepers filed a lawsuit against the U.S. Army Corps of Engineers for granting our 404 permit last year. And so it's -- basically, it's in federal court. We have one federal judge in Alaska. We're supposed to have 3. Congress hasn't appointed any of Trump's federal judge appointees. That's a DC, I can't say that on the air, but that's DC's -- that's a swamp issue. And so she has 550 -- our lone federal judge has 550 cases. to hear. So basically, yes, the lawsuit is filed, and we've weighed in and joined the lawsuit, and that's the status of it. So that's -- I don't really know -- I can't really comment much more than that.

Perfect. One question from the chat, and I'll throw on a little bit in addition to myself, asked what allowed -- I know we already touched on it, but just for clarity, what allowed the ASIC for second quarter to be lower than expected? And my addition, how are you tracking generally towards the sub-$1,625 target?

Do you want me to start this one, Rick?

Yes. Go ahead, Mike.

Yes. So well, as you know, in Alaska, the weather gets much nicer in the summer. So at the beginning of the year, you didn't have much exploration going on, and we just hadn't planned to be purchasing many of the trucks at that time. So Q1 was very low. Q2 came in lower than, I guess, internal guidance, even though we kind of delivered on purchasing these trucks during the quarter and the exploration. So it obviously increased -- from Q1 to Q2, it went up. And we expect Q3 to be consistent with Q2. It could actually be a little bit less just due to how much time we'll be doing our third campaign during the quarter because if we're not doing our campaign, that means Fort Knox is doing theirs. And the least amount of time we spend in a quarter on our campaign, it really impacts our processing costs and our admin costs that we have there. So I expect the cost to be consistent because we still have exploration. We still have truck purchases happening during this quarter. So I think you're going to see -- I expect you're going to see ASIC kind of stay consistent, but I do think we will come under hopefully, by the -- below the $1,625 just based on how we're tracking. Fourth quarter will be slightly -- should be slightly higher just due to the size of that planned campaign. So you might see it creep up a little bit in Q4, but we do definitely hope and plan to come in below the $1,625. Rick, anything to add?

Yes. No, I think -- yes, I mean, in general, we get more, like I say, weather days both in terms of truck transportation traffic. And in the wintertime, obviously, you get the blowing snow and things like that, that slow things down, get super cold, that slows things down. And then you can -- if it's really cold and there's ice in the stockpile, that slows the mill down. So those are kind of the sensitive points, and they all occur in the wintertime, which is not too surprising. Summertime is kind of a breeze, but we do have these capital expenditures that you do tend to do in the summertime, which is exploration and buying and -- putting orders in for trucks and things like that.

The other item I'll add is this is always a function of your ounces sold during the year. And so far, we are tracking kind of slightly ahead of our guided production of 60,000 ounces for the year. So for every ounce more than what we guided, that's going to bring down your cost because it's a fixed cost-driven operation. So all those factors, when you put them together, that's why we kind of expect we'll come in under, but we'll see how we get at the end of Q3.

Kinross again, they're going to have guidance that they're going to meet or beat.

Great. That steady, reliable good news. I don't get a lot of this in the mining industry. SK from the chat had 3 questions, so I'll throw them to you one at a time. Are there plans to monetize the Onyx shares?

Short answer is yes. It's more about timing. We like what they're doing. And so we're -- we'll be patient. And obviously, we have a good working relationship with Onyx and the people at Onyx. So we're not going to torpedo on it at all.

And the only thing I'd add to that is some of those shares are still under escrow from when they were originally issued to HighGold. And then we're also in kind of a lockup on what we can do with them. So they're -- it's not as easy as just saying we're going to sell them, but we're obviously going to consider what options are out there and just watch closely.

Great. He also asks as we go into conference season, what's the message for 2026? What will you be telling folks at the conferences in September, October?

Basically, a lot of it is going to focus on drilling underground at JT -- sorry, at Lucky Shot and getting underground started at JT. We're already -- we're working on the road. We've been doing some grubbing and things -- just getting things ready to get underway in earnest next year. So obviously, the continuing -- steady as she goes in terms of delivering the hedges and reducing the debt and freeing up cash flow to advance or aggressively advance our other 2 projects. I mean both projects, what we envision for Lucky Shot is a mine -- a resource in the 400,000 or 500,000 ounce range with -- once the drilling is completed and a mine plan that can deliver on start-up 30,000 to 40,000 ounces at really good margins because again, the grades -- on a mine diluted grade, it's going to be above 10 grams. So -- and we've got the rail there. I just had a conversation with the Head of Alaska Railroad earlier this week. They're eager to look at transporting our ore in boxes. Again, from a mining standpoint and a transportation standpoint, very simple plan. We're not -- take advantage of the railroad, it's 1/3 of the cost of trucking. So every mile or kilometer we can put on a rail car is less than -- we've got -- we're still evaluating where Lucky Shot ore would go, a number of options there. And then meanwhile, get started on getting the underground progressed at JT. Again, rough numbers, it's about a year to get the underground. It's 1.5 kilometers of underground to get built to get set up to do the drilling. And the other thing about Johnson Tract, it's already with a roughly 1 million ounce gold equivalent resource there at 9.5 grams. That's a great deposit. It's open at depth, and we just can't drill at depth because of the geometry. So once we get underground, we can drill it at depth, and we can see is it 1.5 million ounces? Is it 2 million ounces? It's more than 1 million ounces. So we know it's open. So I'm very excited about getting underground, getting the exploration work underway.

Great. That's a good story for Beaver Creek and Denver. They also asked, is there any thought been given to getting into ETFs like the GDXJ?

Mike, do you want to take that or I guess, to be determined, I mean I'm not frankly surprised we're not on it. I guess that would be my response. We're part of the Russell 2000. That's -- it's a much bigger index. So I shouldn't say bigger, broader. It's not gold specific, obviously. Probably something we got to take a look at it because I'm a bit surprised we're not in it.

Sure. Yes, they said the same thing in the comments, it makes no sense that producing junior miner isn't in the largest passive ETF, so something interesting. Somebody with a very colorful username asks, could we expect the same earnings for the next few quarters if gold stays in this range all year?

I guess I could start. I think Q3 will be consistent with Q2. I think Q4 might drop off a little bit, but Q4 will basically summarize the whole year and keep us -- we plan to have that kind of in line with our guidance that we had for the year. But I think Q3 for sure, if not better.

Great. And I will ask you guys one last question, which should give everybody in the chat a chance to ask their last questions before we wrap. Just curious, what are you most excited for, for the rest of the year? Rick, I'll start with you.

I'd say -- it's just -- I hate to say steady as she goes, but it's kind of -- it is kind of that. And what I really would like to figure out is to get underground at Johnson Tract and get -- sorry, get underground at Lucky Shot and get the drill started because drilling is exciting. And it's a great deposit, and it's very simple. We like simple. So the sooner we can get underground and start drilling -- once we're underground, we can keep going. So -- but I don't want to make -- as I said before, I don't want to start and then have to stop because we've -- the hedges are -- gold price has gone down, and we're scrambling for money and stuff like that. It just we want to make sure we've got kind of a clear path here and I said it's not steam, so it's not going anywhere. And we've got -- it still fits our 5-year plan.

Great. Mike, what keeps you buzzed for the rest of the year?

It's a pretty boring answer, but I guess my response is just to kind of continue to like steady as she goes, deliver these ounces -- delivering these hedges and pay the debt down, but to actually see our balance sheet delever and come down and bring the liabilities down. Like that's kind of what excites me, which is kind of a boring answer [indiscernible] answer, but that's kind of -- I think by the end of this year, it's going to be a very impressive balance sheet with strong earnings.

Awesome. One last question from the chat, and I know you might be bored of this question because I've asked you, I think, on 6 webinars in the last year. But are there plans in the future to reward shareholders with the dividend?

Yes. Again, I love that thought. It's definitely not at this year and probably in all honestly, not a next year thing. But yes, I mean, that is definitely one of the things we're focused on is delivering shareholder value and having a low share count is part of that. And whether it's -- whether in the end, if it ends up being a dividend or share buyback, those are things that longer term, we definitely want to grow the company. We definitely believe in the gold price. We are looking at other opportunities. I think I mentioned before, we're looking at -- we want to find a home for Lucky Shot and JT ores, and we're looking at a number of options there. So kind of stay tuned to that space. Obviously, we're under CA with a number of groups, so we're -- but we are definitely -- that's a bit of a longer-range plan. But if we can achieve our 5-year plan of producing -- getting JT and Lucky Shot into production and getting up to a 200,000 ounce a year production profile and keep our share count low, I mean, again, that's a rocket ship. So that's what we want to build here.

Awesome. Well, on that note, I'll wrap up for today. Rick, Mike, thanks so much for running through questions and talking about the last quarter. Everybody in the chat, thank you so much for participating, everybody who is in the room. If you have any additional questions, you can always reach out to info@contangoore or feel free to respond right to the e-mail that got you to this room. I'll make sure that question gets to the Contango team. But thank you so much. Hope everybody has a great afternoon.

Thank you.