Once the deal is completed, existing Contango investors will own 85% and HighGold shareholders have the rest of the combined company. Buying HighGold is to increase Contango’s annual gold production to more than 150,000 ounces, the company said.
Contango said HighGold’s Johnson Tract high-grade gold project fits well with its strategy of building a multi-asset gold production platform in Alaska.
The company plans to leverage its expertise and the expected cash flow from its Manh Choh project, a 70:30 joint venture with Kinross Gold (TSX: K)(NYSE: KGC), to speed up the development of Johnson Tract, using Contango’s low-risk direct shipping ore (DSO) strategy.
The DSO model, which Contango has successfully applied at Manh Choh, aligns with the growing miner’s criteria for projects that are located near infrastructure, have sufficient grade for direct ore shipping, and have a simple ore body for permitting.
“Contango’s…
