Contango Ore Lining Up Financing for Manh Choh Gold Mine
The developer of the Manh Choh gold mine near Tok is moving ahead with financing. Contango ORE entered into an agreement with ING CAPITAL and Macquarie to arrange a $70 million senior secured loan to fund its portion of pre-production construction and operating expenditures.
Texas-based Contango is the 30 percent partner in Manh Choh developer Peak Gold Joint Venture, while a subsidiary of Ontario-based Kinross Gold Corporation is 70 percent owner and manager. Kinross also operates Alaska’s largest gold mine, Fort Knox, on the outskirts of Fairbanks.
Three potential lenders were chosen for the final round, and each performed independent due diligence and visited the mine site with technical consultants. ING and Macquarie were selected and have now signed an exclusive mandate with Contango.
“We received very competitive terms for the senior loan facility and an attractive cost of capital for the company,” says Contango President and CEO Rick Van Nieuwenhuyse. “Along with our upcoming equity raise, we will fully fund our obligation to the joint venture through production and execute on our other corporate objectives.”
Roc Global—a mining, metals, and clean energy focused investment advisory firm based in New York—is acting as the exclusive financial advisor to Contango. The transaction is expected to close in April.
Construction at the mine site is scheduled for this year, and production is still on track for late 2024. Manh Choh is expected to operate for more than four years, extracting at least 1.2 million ounces of recoverable gold. Ore will be trucked about 250 miles to Fort Knox for processing.
“Contracts have been entered into for contract mining with Kiewit, a global mining and construction contractor, and Black Gold Transport, a well-known local Alaska trucking company based in North Pole,” says Van Nieuwenhuyse. “Capital costs are now 90 percent committed, and the project remains on schedule and on budget.”
Contango also owns the rights to the Lucky Shot, Coleman, and War Baby mines in the Willow Mining District near Hatcher Pass. Van Nieuwenhuyse says the company will soon update shareholders on exploration drill results at Lucky Shot while evaluating other strategic opportunities.
The CEO adds, “This year will be a transformational year for Contango. I am excited about our plan to transform Contango into a gold producer and to the opportunities that being a producer will allow us to achieve.”