Contango Silver & Gold Q3 2026 loss widens to $23M
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Contango Silver & Gold Inc. reported a $22.96 million net loss for the three months ended September 30, 2026, compared with $5.39 million a year earlier. Exploration expense was $26.91 million versus $2.05 million; nine-month net loss was $32.48 million versus $12.02 million.
Contango completed its acquisition of Dolly Varden Silver Corporation on March 26, 2026, issuing common and exchangeable shares; Dolly Varden shareholders owned approximately 48% of the combined company after closing. As of September 30, 2026, Contango had $56.6 million in cash and a $30.0 million working capital deficit. Net cash used in operating activities was $109.1 million during the nine months ended September 30, 2026, while net cash provided by financing activities was $94.1 million. Total debt, net, was $75.1 million, and $45.3 million of principal was scheduled for repayment in the next 12 months. Management said it believes liquidity will be sufficient for anticipated requirements, but said there is no assurance it can raise additional capital or refinance existing debt on acceptable terms, or at all.
A federal court entered final judgment for the federal defendants and J T Mining, Inc. on September 15, 2026, in the Johnson Tract permit case; the court did not vacate the permit.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- None.
Negative
- Moderate pointQ3 net loss: $22.96 million, versus $5.39 million a year earlier.
- Moderate pointNine-month operating cash flow used $109.1 million, versus $60.2 million provided.
Filing Explained
The February financing added common shares through exercised warrants, while eight point one million dollars of ATM sale capacity remained as of September thirtieth, 2026.
In the February 12, 2026 offering, Contango sold 1,678,206 common shares and issued pre-funded warrants for up to 325,000 more at
The company also sold 657,584 shares through its at-the-market program during the nine months ended September 30, 2026, for net proceeds of
The filing specifies that
Key Figures
Key Terms
working capital deficit financial
at-the-market offering program financial
pre-funded warrants financial
asset acquisition financial
overriding net smelter return royalty financial
fair-value hierarchy financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much did CTGO lose in the third quarter of 2026?
What were CTGO’s cash and working capital at September 30, 2026?
What are the terms of CTGO’s $10 million secured promissory note?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” or “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ☐ |
Accelerated filer ☐ |
Smaller reporting company |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The total number of shares of common stock, par value $0.01 per share, outstanding as of November 13, 2026 was
The total number of exchangeable shares outstanding as of November 13, 2026 was 33,007. (See Note 8 - Stockholders’ Equity and Note 16 - Acquisitions for discussion.)
Table of Contents
CONTANGO SILVER & GOLD INC.
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION |
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Item 1. |
Financial Statements (Unaudited) |
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Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 |
3 |
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Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2026 and 2025 |
4 |
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Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 |
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Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2026 and 2025 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
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Item 4. |
Controls and Procedures |
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PART II – OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
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Item 1A. |
Risk Factors |
35 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
35 |
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Item 4. |
Mine Safety Disclosures |
35 |
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Item 5. |
Other Information |
35 |
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Item 6. |
Exhibits |
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All references in this Form 10-Q to the “Company”, “Contango”, “we”, “us” or “our” are to Contango Silver & Gold Inc.
2
Table of Contents
CONTANGO SILVER & GOLD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
Item 1 - Financial Statements
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September 30, 2026 |
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December 31, 2025 |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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Restricted cash |
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Derivative contract asset |
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Prepaid expenses and other |
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Income taxes receivable |
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Total current assets |
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LONG-TERM ASSETS: |
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Investment in Peak Gold, LLC |
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Mineral property & equipment, net |
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Marketable securities |
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Total long-term assets |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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Accrued liabilities |
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Liability on flow-through share issuances |
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Royalty reimbursement advance |
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Derivative contract liability |
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Debt, current portion |
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Total current liabilities |
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NON-CURRENT LIABILITIES: |
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Asset retirement obligations |
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Contingent consideration liability |
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Derivative contract liability |
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Debt non-current portion, net |
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Deferred tax liability |
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Total non-current liabilities |
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TOTAL LIABILITIES |
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COMMITMENTS AND CONTINGENCIES (NOTE 11) |
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STOCKHOLDERS’ EQUITY: |
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Preferred Stock, |
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— |
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Series A, special voting preferred stock, $ |
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— |
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Common Stock, $ |
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Exchangeable Shares, |
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Additional paid-in capital |
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Treasury stock at cost (nil at September 30, 2026; and |
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Accumulated other comprehensive loss |
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Accumulated deficit |
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TOTAL STOCKHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of Contents
CONTANGO SILVER & GOLD INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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EXPENSES: |
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Exploration |
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$ |
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Depreciation |
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Accretion |
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General and administrative |
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Total expenses |
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Income from equity investment in Peak Gold, LLC |
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Total (loss)/income from operations |
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OTHER INCOME/(EXPENSE): |
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Interest and other income |
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Interest and finance expense |
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Loss on derivative contracts |
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Gain/(loss) on metal sales |
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Gain/(loss) on marketable securities |
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Total other income/(expense) |
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Loss before income taxes |
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Income tax benefit/(expense) |
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NET LOSS |
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$ |
( |
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$ |
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OTHER COMPREHENSIVE INCOME/(LOSS) |
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Currency translation adjustment |
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NET COMPREHENSIVE LOSS |
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$ |
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LOSS PER SHARE |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Table of Contents
CONTANGO SILVER & GOLD INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Nine Months Ended September 30, |
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2026 |
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2025 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Stock-based compensation |
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Depreciation expense |
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Accretion expense |
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Non-cash portion for lease expense |
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Equity earnings from investment in Peak Gold, LLC |
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Cash distribution from Peak Gold, LLC |
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Amortization of flow through liability |
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Loss from derivative contracts |
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Cash paid to settle derivative contracts |
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Unrealized gain from marketable securities |
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Interest expense paid in stock |
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Amortization of debt discount and debt issuance fees |
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Drawdown of silver royalty |
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Deferred tax (benefit)/expense |
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Changes in operating assets and liabilities, net of acquisition: |
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Decrease in prepaid expenses and other |
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Increase in accounts payable and accrued liabilities |
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Decrease in income taxes receivable |
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Net cash (used in)/provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Transaction costs paid as part of the Dolly Varden acquisition |
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Cash acquired as part of the Dolly Varden acquisition |
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Cash consideration paid for Avidian Alaska Acquisition |
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Acquisition of property and equipment |
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Net cash provided by/(used in) investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Cash proceeds from the exercise of pre-funded warrants |
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Cash proceeds from the exercise of options |
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Cash proceeds from debt |
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Principal repayments on debt |
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Cash proceeds from common stock and warrant issuance, net |
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Shares repurchased for tax withholdings on share-based awards |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
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CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD |
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CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD |
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$ |
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$ |
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Supplemental disclosure of cash flow information |
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Cash paid for: |
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Interest expense |
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$ |
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$ |
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Non-cash investing and financing activities |
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Common stock issuance for acquisition |
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$ |
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$ |
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Exchangeable shares issuance for acquisition |
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Replacement options issuance for acquisition |
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Promissory note entered for acquisition |
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Right of use asset additions |
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( |
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Total non-cash investing and financing activities |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Table of Contents
CONTANGO SILVER & GOLD INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY/(DEFICIT)
(Unaudited)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Exchangeable Shares |
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Paid-In |
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Treasury |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Stock |
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Loss |
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Deficit |
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Equity |
|
|||||||||
Balance at June 30, 2026 |
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Stock-based compensation |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock issuance |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of common stock issuance |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Retraction of exchangeable shares |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Exercise of options |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Shares issued for convertible debt interest payment |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net loss for the period |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Other comprehensive income for the period |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at September 30, 2026 |
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
|
|
|
Total |
|
|||||||||
|
Common Stock |
|
|
Exchangeable Shares |
|
|
Paid-In |
|
|
Treasury |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Stockholders’ |
|
|||||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Stock |
|
|
Loss |
|
|
Deficit |
|
|
Deficit |
|
|||||||||
Balance at June 30, 2025 |
|
|
|
$ |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
Stock-based compensation |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock issuance |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of common stock issuance |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Common stock issuance for acquisitions |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Shares issued for convertible debt interest payment |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net loss for the period |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Balance at September 30, 2025 |
|
|
|
$ |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
|
|
|
Total |
|
|||||||||
|
Common Stock |
|
|
Exchangeable Shares |
|
|
Paid-In |
|
|
Treasury |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Stockholders’ |
|
|||||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Stock |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
|||||||||
Balance at December 31, 2025 |
|
|
|
$ |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Stock-based compensation |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Restricted shares activity |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock issuance |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of common stock issuance |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Common stock issuance for acquisition |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Exchangeable shares issuance for acquisition |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Replacement options issuance for acquisition |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Retraction of exchangeable shares |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Exercise of options |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Exercise of pre-funded warrants |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cancellation of treasury shares |
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares issued for convertible debt interest payment |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net loss for the period |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Other comprehensive loss for the period |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Balance at September 30, 2026 |
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
|
|
|
Total |
|
|||||||||
|
Common Stock |
|
|
Exchangeable Shares |
|
|
Paid-In |
|
|
Treasury |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Stockholders’ |
|
|||||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Stock |
|
|
Loss |
|
|
Deficit |
|
|
Equity/(Deficit) |
|
|||||||||
Balance at December 31, 2024 |
|
|
|
$ |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Stock-based compensation |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Restricted shares activity |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock issuance |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of common stock issuance |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Common stock issuance for acquisitions |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Shares repurchased for tax withholdings on share-based awards |
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Shares issued for convertible debt interest payment |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net loss for the period |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Balance at September 30, 2025 |
|
|
|
$ |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Table of Contents
CONTANGO SILVER & GOLD INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Business
Contango Silver & Gold Inc. (“Contango” or the “Company”) conducts its business through the following means:
CORE Alaska LLC (“CORE Alaska”), a wholly-owned subsidiary of the Company has a
The Johnson Tract Project, Kitsault Valley Project, Lucky Shot Property, Contango Minerals Properties and Avidian Properties are collectively referred to in these Notes to the Unaudited Condensed Consolidated Financial Statements as the “Contango Properties”.
The Company’s Manh Choh Project is in the production stage, while all other projects are in the exploration stage.
Refer to Note 16 for description of the acquisition of Dolly Varden.
2. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by US GAAP for complete annual consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. All such adjustments are of a normal recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Form 10-K for the year ended December 31, 2025. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026. Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.
7
Table of Contents
3. Liquidity
The Company’s cash requirements primarily relate to exploration activities at the Contango Properties, repayment of debt and related interest, and general and administrative expenses. As of September 30, 2026, the Company had a cash and cash equivalent balance of $
During the nine months ended September 30, 2026, the Company decreased its cash balance primarily through cash used in operating and investing activities, partially offset by financing activities, the acquisition of Dolly Varden and distributions from the Peak Gold JV. Key sources of liquidity during the period included net proceeds of $
The Peak Gold JV funds its operations from cash flows generated from operations, and the Company does not anticipate future cash calls from the joint venture. While the Company expects that additional distributions from the Peak Gold JV are probable, the timing and amount of such distributions remain subject to operational and market factors, and there can be no assurance that future distributions will be made.
Based on its current working capital, anticipated operating and investing activities, expected distributions from the Peak Gold JV, and demonstrated ability to access the equity capital markets, management believes the Company will have sufficient liquidity to meet its anticipated capital and working capital requirements. However, no assurance can be given that the Company will be able to raise additional capital or refinance existing indebtedness on acceptable terms, or at all, as availability will depend on factors including market conditions, operating results, and metal prices.
4. Summary of Significant Accounting Policies
Please see the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "Annual Report") for a summary of the Company's significant accounting policies. There have been no changes to the Company's significant accounting policies since the Annual Report, except for the following:
Cash and cash equivalents
Cash and cash equivalents consists of all cash balances, highly liquid investments with an original maturity of three months or less and cashable guaranteed investment contracts with original maturities greater than 90 days that are puttable by the Company to the issuer within 90 days from the original purchase date. Because of the short maturity of these investments, the carrying amounts approximate their fair value.
Flow-through shares
Flow-through shares are a type of common share issued pursuant to the provisions of the Income Tax Act (Canada) (the “ITA”). These shares enable investors to claim tax deductions arising from the Company’s renunciation of qualifying resource expenditures. The Company accounts for flow-through shares by recognizing the amount of any premium paid in excess of the market price of the Company’s common shares, without flow-through features, as of the date of issue as a liability related to the flow-through share issuance. The liability is subsequently unwound and recognized in the tax provision (deferred tax benefit) as the qualifying resource expenditures are incurred and validly renounced, or when renunciation is sufficiently established based on the facts and filings.
Recently issued accounting pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Recently issued accounting pronouncements not yet effective
In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2024-03 (“ASU 2024-03”), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring disclosure of specified information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026. The Company has not early adopted this standard and is currently assessing the potential impacts of the standard.
8
Table of Contents
5. Investment in the Peak Gold JV
The following table is a roll-forward of the Company’s investment in the Peak Gold JV as of September 30, 2026:
|
|
Investment |
|
|
|
|
in Peak Gold, LLC |
|
|
Investment balance at December 31, 2024 |
|
$ |
|
|
Distributions received from Peak Gold, LLC |
|
|
( |
) |
Income from equity investment in Peak Gold, LLC |
|
|
|
|
Investment balance at March 31, 2025 |
|
$ |
|
|
Distributions received from Peak Gold, LLC |
|
|
( |
) |
Income from equity investment in Peak Gold, LLC |
|
|
|
|
Investment balance at June 30, 2025 |
|
$ |
|
|
Distributions received from Peak Gold, LLC |
|
|
( |
) |
Income from equity investment in Peak Gold, LLC |
|
|
|
|
Investment balance at September 30, 2025 |
|
$ |
|
|
Distributions received from Peak Gold, LLC |
|
|
( |
) |
Income from equity investment in Peak Gold, LLC |
|
|
|
|
Investment balance at December 31, 2025 |
|
$ |
|
|
Distributions received from Peak Gold, LLC |
|
|
( |
) |
Income from equity investment in Peak Gold, LLC |
|
|
|
|
Investment balance at March 31, 2026 |
|
$ |
|
|
Distributions received from Peak Gold, LLC |
|
|
( |
) |
Income from equity investment in Peak Gold, LLC |
|
|
|
|
Investment balance at June 30, 2026 |
|
$ |
|
|
Income from equity investment in Peak Gold, LLC |
|
|
|
|
Investment balance at September 30, 2026 |
|
$ |
|
|
|
|
|
|
|
As of September 30, 2026 the Company has contributed approximately $
During the nine months ended September 30, 2026, the Company received cash distributions of $
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, 2026 |
|
|
September 30, 2025 |
|
|
September 30, 2026 |
|
|
September 30, 2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Peak Gold JV income does not include any provisions related to income taxes as the Peak Gold JV is treated as a partnership for income tax purposes. As of September 30, 2026 and September 30, 2025, the Company's cumulative investment in the Peak Gold JV exceeded its cumulative losses, which allowed the Company to recognize its investment of $
The difference between the carrying value of the Company's investment in the Peak Gold JV and its proportionate share of the Peak Gold JV's members' equity is primarily attributable to previously suspended equity-method losses that were recognized based on historical ownership percentages. As a result of changes in ownership interests over time, the carrying value differs from the Company's current proportionate share of the associate's members' equity by approximately $
9
Table of Contents
6. Prepaid Expenses and Other Assets
The Company has prepaid expenses and other assets of $
7. Net Loss Per Share
A reconciliation of the components of basic and diluted net loss per share of common stock is presented below:
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
|
|
|
Weighted |
|
|
Loss |
|
|
|
|
|
Weighted |
|
|
Loss |
|
||||||
|
|
Net Loss |
|
|
Shares |
|
|
Per Share |
|
|
Net Loss |
|
|
Shares |
|
|
Per Share |
|
||||||
Basic Net Loss per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net loss attributable to common stock |
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted Net Loss per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net loss attributable to common stock |
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
|
|
|
Weighted |
|
|
Loss |
|
|
|
|
|
Weighted |
|
|
Loss |
|
||||||
|
|
Net Loss |
|
|
Shares |
|
|
Per Share |
|
|
Net Loss |
|
|
Shares |
|
|
Per Share |
|
||||||
Basic Net Loss per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net loss attributable to common stock |
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted Net Loss per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net loss attributable to common stock |
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
||
The Company uses the two-class method to compute basic earnings per share. Under this method earnings are allocated to common shares, exchangeable shares and participating securities according to their participation rights in dividends declared and undistributed earnings and divide the income available to each class by the weighted average number of common shares for the period in each class. Unvested restricted stock grants made to our non-employee directors and certain employees are considered participating securities because the shares have the right to receive non-forfeitable dividends. Because the participating shares have no obligation to share in net losses, we do not allocate losses to our common shares in this calculation.
Diluted earnings per share reflect the potential dilutive effect of securities that could share in our earnings. Restricted stock awarded to non-employee directors and certain employees that have not yet vested are considered when computing diluted earnings per share. The Company uses the treasury stock method to determine the dilutive effect of unvested restricted stock. Shares of unvested restricted stock under a stock-based compensation arrangement are considered options for purposes of computing diluted earnings per share and are considered outstanding shares as of the grant date for purposes of computing diluted earnings per share even though their exercise may be contingent upon vesting. Those stock-based awards are included in the diluted earnings per share computation even if the non-employee director and employee may be required to forfeit the stock at some future date, or no shares may ever be issued to the non-employee director and/or employee. Unvested restricted stocks are not included in outstanding common shares in computing basic earnings per share.
As of September 30, 2026 and 2025, options to purchase
8. Stockholders’ Equity
The Company is authorized to issue
10
Table of Contents
Agreement (see Note 16 for details) were outstanding. The remaining restricted stock outstanding will vest between January 2027 and April 2029.
ATM Program
The Company may, from time to time, offer and sell shares of common stock in an aggregate amount of up to $
Underwritten Offering - February 2026
On February 12, 2026, the Company sold
The issued pre-funded warrants were classified as a component of permanent equity in the Company’s Condensed Consolidated Balance Sheets as they are freestanding financial instruments that are immediately exercisable, do not embody an obligation for the Company to repurchase its own shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. All of the shares underlying the pre-funded warrants have been included in the weighted-average number of shares of common stock used to calculate net income/loss per share, basic and diluted, attributable to common stockholders as the shares may be issued for little or no consideration, are fully vested, and are exercisable after the original issuance date of the pre-funded warrants. As of September 30, 2026, all the pre-funded warrants have been exercised and none remained outstanding.
9. Mineral Property & Equipment
The table below sets forth the book value by type of fixed asset owned by the Company (excludes Peak Gold LLC assets) as well as the estimated useful life:
Asset Type |
|
Estimated |
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Mineral properties |
|
Not Depleted |
|
|
|
|
|
|
||
Dolly Varden |
|
|
|
$ |
|
|
$ |
|
||
Johnson Tract |
|
|
|
|
|
|
|
|
||
Lucky Shot |
|
|
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
|
|
||
Land |
|
Not Depreciated |
|
|
|
|
|
|
||
Buildings and improvements |
|
|
|
|
|
|
|
|||
Construction in progress |
|
Not Depreciated |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
|
|||
Vehicles |
|
|
|
|
|
|
|
|||
Computer and office equipment |
|
|
|
|
|
|
|
|||
Furniture & fixtures |
|
|
|
|
|
|
|
|||
Right of use asset |
|
|
|
|
|
|
|
|||
Less: Accumulated depreciation and |
|
|
|
|
( |
) |
|
|
( |
) |
Less: Accumulated impairment |
|
|
|
|
( |
) |
|
|
( |
) |
Mineral Property & Equipment, net |
|
|
|
$ |
|
|
$ |
|
||
10. Stock-Based Compensation
On November 14, 2023, the stockholders of the Company approved and adopted the 2023 Omnibus Incentive Plan (the “2023 Plan”). On March 17, 2026, the stockholders of the Company approved and adopted the 2026 Omnibus Incentive Plan (the “2026 Plan”) (together with the 2023 Plan, referred to as the “Equity Plans”), which replaces the 2023 Plan with respect to new grants by the Company. Shares available for grant under the 2026 Plan consist of
11
Table of Contents
2023 Plan that expire, terminate, or are canceled for any reason without having been exercised in full, and (iii) shares subject to awards that are not appreciation awards granted under the 2023 Plan that are forfeited for any reason.
As of September 30, 2026, there were
The remaining shares of restricted stock outstanding will vest between January 2027 and April 2029.
Restricted Stock. Under the Equity Plans, the compensation committee of the Company's board of directors (the “Compensation Committee”) shall determine to what extent, and under what conditions, the participant shall have the right to vote shares of stock awards and to receive any dividends or other distributions paid on such shares during the restriction period. The terms and applicable voting and dividend rights are outlined in the individual restricted stock agreements. All restricted stock grants are expensed over the applicable vesting period based on the fair value at the date the stock is granted. The grant date fair value may differ from the fair value on the date the individual’s restricted stock actually vests. The total grant date fair value of the restricted stock granted during the nine months ended September 30, 2026 and September 30, 2025 was $
As of September 30, 2026, the total compensation cost related to nonvested restricted share awards not yet recognized was $
Below table indicates the unvested restricted stock balance as of September 30, 2026 and December 31, 2025:
|
|
Number of restricted shares unvested |
|
|
Balance - January 1, 2026 |
|
|
|
|
Restricted shares granted |
|
|
|
|
Restricted shares vested |
|
|
( |
) |
Balance - September 30, 2026 |
|
|
|
|
|
|
|
|
|
Balance - January 1, 2025 |
|
|
|
|
Restricted shares granted |
|
|
|
|
Restricted shares vested |
|
|
( |
) |
Balance - December 31, 2025 |
|
|
|
|
Stock Options. The Company applies the fair value method to account for stock option expense. Under this method, cash flows from the exercise of stock options resulting from tax benefits in excess of recognized cumulative compensation cost (excess tax benefits) are classified as financing cash flows. See Note 4 - Summary of Significant Accounting Policies from the Annual Report. As part of the Dolly Varden Acquisition (see Note 16), the Company issued
12
Table of Contents
A summary of the status of stock options granted under the Equity Plans as of September 30, 2026 and changes during the nine months then ended, is presented in the table below:
|
|
Nine Months Ended |
|
|||||
|
|
September 30, 2026 |
|
|||||
|
|
Shares Under |
|
|
Weighted |
|
||
Outstanding as of December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Exercised |
|
|
( |
) |
|
$ |
|
|
Canceled |
|
|
( |
) |
|
$ |
|
|
Expired |
|
|
( |
) |
|
$ |
|
|
Outstanding at the end of the period |
|
|
|
|
$ |
|
||
Aggregate intrinsic value |
|
$ |
|
|
|
|
||
Exercisable, end of the period |
|
|
|
|
|
|
||
Available for grant, end of period |
|
|
|
|
|
|
||
Weighted average fair value per share of options |
|
$ |
|
|
|
|
||
11. Commitments and Contingencies
Tetlin Lease. The Tetlin Lease had an initial
Pursuant to the terms of the Tetlin Lease, the Peak Gold JV is required to spend $
Gold Exploration. The Company’s Triple Z, Eagle/Hona, Shamrock, Willow, Golden Zone, Amanita, Amanita NE and Lucky Shot claims are all located on State of Alaska lands. The annual claim rentals on these projects vary based on the age of the claims, and are due and payable in full by November 30 of each year. Annual claims rentals for the 2025-2026 assessment year totaled $
Lucky Shot Property. With regard to the Lucky Shot Property, the Company was obligated to pay CRH Funding II PTE. LTD, a Singapore private limited corporation (“CRH”), additional consideration if production on the Lucky Shot Property met two separate milestone payment thresholds. Under the first threshold, if the Company achieved (1) an aggregate “mineral resource” equal to
As of September 30, 2026 and December 31, 2025, the Company has recognized contingent consideration payable of $nil and $
On May 4, 2026, LSA entered into a purchase agreement (the “LSA Purchase Agreement”) with Alaska Hardrock Inc. for the purchase of mineral claims, including a
13
Table of Contents
$
Royal Gold Royalties. Royal Gold Inc. ("Royal Gold"), the former
CIRI Lease Agreement. J T Mining Inc. entered into a lease agreement effective May 17, 2019 with CIRI and shall pay the sum of $
CIRI Exploration Agreement. J T Mining Inc. entered into an exploration agreement effective July 1, 2023 with CIRI and on each anniversary of the effective date thereafter during the
Mining Lease and Option to Purchase Agreement Amanita Project.
Cook Inletkeeper, Chickaloon Village Traditional Counsel, Center for Biological Diversity. On September 10, 2024, the U.S. Army Corps of Engineers ("Corps") issued to J T Mining Inc. (a wholly owned subsidiary of the Company) a permit under Section 404 of the Clean Water Act to construct an access road and improve an existing air strip on the south parcel of the Johnson Tract project. On May 20, 2025, Cook Inletkeeper, Chickaloon Village Traditional Council, Center for Biological Diversity, and an individual plaintiff filed suit in the United States District Court for the District of Alaska against the Corps and related officials, challenging the Corps’ issuance of the Section 404 permit. The plaintiffs seek to vacate the Section 404 permit issued and halt mineral exploration on the lands. The complaint alleges that the Corps Environmental Assessment for the Section 404 permit failed to adequately analyze the potential for acid rock drainage and contaminants leaching into the Johnson River and Cook Inlet and the harmful effects of the project on beluga whales at the Cook Inlet. In July 2025, the Company filed a motion to intervene as a defendant in the lawsuit to protect its legal rights under the Section 404 permit, its significant investment in the Johnson Tract, and its mineral exploration lease with CIRI. On September 14, 2026, the U.S. District Court for the District of Alaska denied the plaintiffs’ motion for summary judgment and granted the cross-motions for summary judgment filed by the federal defendants and J T Mining, Inc. in the lawsuit challenging the Johnson Tract Section 404 permit. The court directed the Clerk of Court to enter final judgment and close the case. Final judgment in favor of the federal defendants and J T Mining, Inc. was entered on September 15, 2026. The court did not vacate the challenged permit.
12. Income Taxes
The Company maintained a full valuation allowance on its deferred tax asset as of September 30, 2026 and December 31, 2025. The Company has recognized an income tax benefit of $
At each reporting period, the Company weighs all positive and negative evidence to determine whether the deferred tax assets are more likely than not to be realized. As a result of this analysis at September 30, 2026 and December 31, 2025, the Company provided a full valuation allowance against the deferred tax assets. As part of the Dolly Varden acquisition, the Company measured and recorded a net deferred tax liability through acquisition accounting with an offsetting entry to the mineral property & equipment assets. The Company’s deferred tax liability originating from the Dolly Varden acquisition was $
14
Table of Contents
and December 31, 2025, respectively. This relates to the book to tax temporary differences between the carryover tax basis and new book basis of the net assets acquired, recognized at a statutory rate of
For the three and nine months ended September 30, 2026, the Company recognized income tax benefits of $
13. Debt
The table below shows the components of Debt, net as of September 30, 2026 and December 31, 2025:
|
|
September 30, |
|
|
December 31, |
|
||
Secured Debt Facility |
|
|
|
|
|
|
||
Principal amount - Term debt |
|
$ |
|
|
$ |
|
||
Unamortized debt discount and issuance costs |
|
|
( |
) |
|
|
( |
) |
Debt, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Unsecured, Subordinated Convertible Debenture |
|
|
|
|
|
|
||
Principal amount |
|
$ |
|
|
$ |
|
||
Unamortized debt discount and issuance costs |
|
|
( |
) |
|
|
( |
) |
Debt, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Secured, Promissory Note |
|
|
|
|
|
|
||
Principal amount |
|
$ |
|
|
$ |
— |
|
|
Interest and costs |
|
|
|
|
|
— |
|
|
Debt |
|
$ |
|
|
$ |
— |
|
|
Total Debt, net |
|
$ |
|
|
$ |
|
||
Less current portion |
|
$ |
|
|
$ |
|
||
Debt non-current portion, net |
|
$ |
|
|
$ |
|
||
Secured Credit Facility
On May 17, 2023, the Company entered into a credit and guarantee agreement (the “Credit Agreement”), by and among CORE Alaska as the borrower, each of the Company, LSA, and Contango Minerals, as guarantors, each of the lenders party thereto from time to time, ING Capital LLC ("ING") as administrative agent for the lenders, and Macquarie Bank Limited ("Macquarie"), as collateral agent for the secured parties. The Credit Agreement provides for a senior secured loan facility (the “Facility”) of up to $
On July 1, 2026, the Company amended its Credit Agreement pursuant to which the delivery of a total
Principal repayments of the outstanding secured credit facility are as follows:
15
Table of Contents
The Credit Agreement is secured by all the assets and properties of the Company and its subsidiaries, including the Company’s
During the first quarter of 2026, the Company sold all gold purchased from Peak Gold, LLC for $
During the second quarter of 2026, the Company sold all gold purchased from Peak Gold, LLC for $
During the third quarter of 2026, the Company sold all gold purchased from Peak Gold, LLC for $
The carrying value of the Facility approximates its fair value as it accrues interest based on market interest rates. The Company recognized interest expense totaling $
As of September 30, 2026, the Company was in compliance with all of the required debt covenants.
The Company is scheduled to repay $
In connection with entering into the Credit Agreement, the Company entered into a mandate lender arrangement fee letter (the “MLA Fee Letter”) with ING and Macquarie (collectively, the “Mandated Parties”) and a production linked arrangement fee letter (the “PLA Fee Letter”) with ING. Pursuant to the MLA Fee Letter, the Company paid the Mandated Parties on the date of the initial disbursement at the initial closing an upfront fee, calculated based on the principal amount of the Facility. Additionally, the Company paid the Mandated Parties an initial disbursement upfront fee, calculated based on the initial disbursement of $
Unsecured Convertible Debenture
On April 26, 2022, the Company closed on a $
The Company agreed to an interest rate of
The Debenture currently bears interest at
16
Table of Contents
convert the Debenture into common stock at any time at a conversion price of $
In connection with the issuance of the Debenture, the Company agreed to pay an establishment fee of
The fair value of the Debenture (Level 3) as of September 30, 2026 and December 31, 2025 was approximately $
Secured Promissory Note
On July 1, 2026, the Company entered into a $
14. Derivatives and Hedging Activities
On August 2, 2023, CORE Alaska, a subsidiary of the Company, pursuant to an ISDA Master Agreement entered into with ING Capital Markets LLC (the “ING ISDA Master Agreement”) and an ISDA Master Agreement entered into with Macquarie Bank Limited (the “Macquarie ISDA Master Agreement”), in accordance with its obligations under the Credit Agreement, entered into a series of hedging agreements with ING Capital LLC and Macquarie Bank Limited for the sale of an aggregate of
Additionally, as of September 30, 2026, the Company had a carry trade outstanding for
17
Table of Contents
Fair Values of Derivative Instruments on the Balance Sheet
The table below presents the fair value of the Company’s derivative financial instruments, as well as their classification on the Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025.
In addition to the settlement of gold hedges (Note 13 - Debt), as part of a price protection strategy to offset the hedge settlements, the Company paid $
|
|
|
|
As of September 30, 2026 |
|
|
As of December 31, 2025 |
|
||||||||||||||||||
Derivatives not designated as hedging instruments |
|
Balance Sheet |
|
Gross |
|
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Gross |
|
|
Net |
|
||||||
Commodity Contracts |
|
Derivative contract asset - current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Commodity Contracts |
|
Derivative contract liability - current |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Commodity Contracts |
|
Derivative contract liability - noncurrent |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||||
As of September 30, 2026 and December 31, 2025, the Company’s derivative instruments related to these agreements were in a net liability position with an aggregate fair value of $
Effect of Derivatives Not Designated as Hedging Instruments on the Income Statement
The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2026 and 2025, respectively.
Derivatives Not Designated as Hedging Instruments under Subtopic 815-20 |
|
Location of Gain or (Loss) Recognized in Other Income (Expense) |
|
Amount of Loss |
|
|
Amount of Loss |
|
||||||||||
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity Contracts |
|
Unrealized gain/(loss) on derivative contracts |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Commodity Contracts |
|
Realized loss on derivative contracts |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Total |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Credit-risk-related Contingent Features
Cross Default. The Company has agreements with each of its derivative counterparties that contain a provision that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.
Material adverse change. Certain of the Company's agreements with its derivative counterparties contain provisions where if a specified event or condition occurs that materially changes the Company's creditworthiness in an adverse manner, the Company may be required to fully collateralize its obligations under the derivative instrument.
18
Table of Contents
Incorporation of loan covenants. The Company has an agreement with a derivative counterparty that incorporates the loan covenant provisions of the Company's indebtedness with a lender affiliate of the derivative counterparty. Failure to comply with the loan covenant provisions would result in the Company being in default on any derivative instrument obligations covered by the agreement.
Metal Sales
The Company purchases its
The sales are accounted for under FASB ASC 610, "Other Income" and not ASC 606, "Revenue from Contracts with Customers", since the sales are incidental to the Company's primary contractual obligation and do not constitute the Company's ongoing or central operations.
Beginning on February 25, 2025, to satisfy physical delivery obligations under the existing hedge agreements, the Company entered into agreements with the counterparties to repurchase hedged quantities of gold at a contracted fixed price at each hedge delivery date. As of September 30, 2026 the Company did not have any repurchase obligations.
15. Fair Value Measurement
The FASB ASC Topic 820, defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. FASB ASC Topic 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets.
The three levels are defined as follows:
Level 1 – Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.
Level 2 – Other inputs that are observable directly or indirectly, such as quoted prices in markets that are not active or inputs, which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 – Unobservable inputs for which there are little or no market data and which the Company makes its own assumptions about how market participants would price the assets and liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity. The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level. There were no transfers between fair value hierarchy levels for the period ended September 30, 2026.
Fair Value on a Recurring Basis
The Company performs fair value measurements on a recurring basis for the following:
Derivative Financial Instruments - Derivative financial instruments are carried at fair value and measured on a recurring basis. The Company's potential derivative financial instruments include features embedded within its convertible debenture with QRC (see Note 13). These measurements were not material to the Consolidated Financial Statements.
Commodity Hedges - As discussed in Note 14, the Company has entered into hedge agreements with delivery obligations of gold ounces. The Company utilizes derivative instruments in order to manage exposure to risks associated with fluctuating commodity prices. The derivative hedges are marked-to-market with changes in estimated value driven by forward commodity prices.
Marketable Securities - The Company owns an investment in a publicly traded company, Onyx Gold Corp. ("Onyx"). Changes in the fair value of this investment are recorded through income using quoted prices obtained from securities exchanges.
19
Table of Contents
Contingent Consideration - As discussed in Note 11, as of December 31, 2025 the Company was obligated to pay CRH additional consideration if production on the Lucky Shot Property met two separate milestone payment thresholds. The fair value of the share-based portion of the contingent consideration is measured on a recurring basis, and is driven by the probability of reaching the milestone payment thresholds. The cash portion of the contingent consideration related to that asset acquisition will be recorded when the contingency is resolved. As of September 30, 2026, the contingent consideration was settled.
The following table summarizes the fair value of the Company’s financial assets and liabilities, by level within the fair-value hierarchy:
As of September 30, 2026 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||
Financial Assets |
|
|
|
|
|
|
|
|
|
|||
Derivative contract asset - current |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Marketable securities - noncurrent |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|||
Derivative contract liability - current |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
As of December 31, 2025 |
|
|
|
|
|
|
|
|
|
|||
Financial Assets |
|
|
|
|
|
|
|
|
|
|||
Marketable securities - noncurrent |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|||
Derivative Liability - current |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Derivative Liability - noncurrent |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Contingent consideration liability - noncurrent |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Fair Value on a Nonrecurring Basis
The Company applies the provisions of the fair value measurement standard on a non-recurring basis to its non-financial assets and liabilities, including mineral properties, business combinations, and asset retirement obligations. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments if events or changes in certain circumstances indicate that adjustments may be necessary.
16. Acquisition
Dolly Varden Acquisition
On December 7, 2025, Contango and Dolly Varden entered into an Arrangement Agreement, which was subsequently amended on February 11, 2026 (as amended, the "Arrangement Agreement"). Pursuant to the Arrangement Agreement, Contango agreed to acquire all of the issued and outstanding common shares of Dolly Varden in exchange for Contango common shares at an Exchange Ratio of
Dolly Varden’s primary asset is its
In addition to the Kitsault Valley Project, Dolly Varden has consolidated a land package of six additional exploration properties in the same region. These properties have historically been explored for gold, copper, silver, lead and zinc. Including the Kitsault Valley Project and these additional properties, Dolly Varden holds mineral tenures totaling approximately 100,000 hectares within the region.
Immediately prior to the closing of the Arrangement, all outstanding restricted share units of Dolly Varden vested and were settled for Dolly Varden Shares. All outstanding Dolly Varden Options were exchanged for Contango stock options, adjusted to reflect the Exchange Ratio.
Eligible Canadian stockholders of Dolly Varden were entitled to elect to receive exchangeable shares in a Canadian subsidiary of Contango, which are exchangeable on a one for one basis into Contango common shares, in lieu of receiving Contango Shares directly.
On March 17, 2026, the shareholders of Dolly Varden and Contango voted to approve the acquisition, which was subsequently approved by Supreme Court of British Columbia on March 23, 2026. The acquisition was completed on March 26, 2026, following the satisfaction of all remaining legal and regulatory requirements.
20
Table of Contents
Upon completing the acquisition, Dolly Varden shareholders owned approximately
Contango evaluated the Arrangement Agreement under ASC 805, Business Combinations. ASC 805 requires that an acquirer determine whether it has acquired a business. If Contango obtained control over a business, the transaction would be accounted pursuant to the acquisition method of accounting and, as such, identifiable assets acquired and liabilities assumed would generally be recorded at fair value on the acquisition date and could result in recognition of goodwill or a bargain purchase gain. In evaluating the criteria outlined by this standard, Contango concluded that the acquired set of assets did not meet the US GAAP definition of a business. Therefore, Contango accounted for the Arrangement as an asset acquisition. An acquisition accounted as an asset acquisition requires an acquiring entity to allocate the cost of an asset acquisition to the assets acquired and liabilities assumed generally based on their relative fair values. Goodwill is not recognized in an asset acquisition. Transaction costs and fees incurred by Contango are capitalized as part of the cost of the acquisition.
A summary of the fair value of the consideration and the allocation to the net assets acquired is as follows:
|
|
March 26, 2026 |
|
|
Consideration: |
|
|
|
|
Fair value of shares of common stock issued, calculated as |
|
$ |
|
|
Fair value of exchangeable shares issued, calculated as |
|
|
|
|
Fair value of replacement options granted allocated to consideration |
|
|
|
|
Transaction costs |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
Allocation to net assets acquired: |
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
Prepaid expenses and other |
|
|
|
|
Mineral property & equipment, net |
|
|
|
|
|
|
|
|
|
Accrued liabilities |
|
|
( |
) |
Liability on flow-through share issuances |
|
|
( |
) |
Deferred income tax liability |
|
|
( |
) |
|
|
$ |
|
|
The fair value of shares of common stock and exchangeable shares issued was determined by reference to the trading price of the Contango share as of March 26, 2026.
The exchangeable shares issued are substantially the economic equivalent of the Company's shares of common stock and are presented within Stockholders' equity.
21
Table of Contents
17. General and Administrative Expenses
The following table presents the Company's general and administrative expenses for the three and nine months ended September 30, 2026 and 2025.
|
|
Three Months |
|
|
Three Months |
|
|
Nine Months |
|
|
Nine Months |
|
||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
General and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketing and investor relations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Office and administrative costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Regulatory fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries and benefits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Travel |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Director fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
18. Segments
The Company engages in exploration and development for gold and silver ore and associated minerals in Alaska and British Columbia. The Company also holds a
22
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three Months Ended September 30, 2026 |
|
Exploration |
|
|
Peak Gold JV |
|
|
Corporate and other reconciling items |
|
|
Consolidated |
|
||||
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Johnson Tract |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Lucky Shot |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Dolly Varden |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
General exploration |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Total exploration |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Depreciation |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Accretion |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
General and administrative |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total expenses |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from equity investment in Peak Gold, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total income/(loss) from operations |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
OTHER INCOME/(EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Loss on derivative contracts |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Loss on metal sales |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Gain on marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total other expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
INCOME/(LOSS) BEFORE INCOME TAXES |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nine Months Ended September 30, 2026 |
|
Exploration |
|
|
Peak Gold JV |
|
|
Corporate and other reconciling items |
|
|
Consolidated |
|
||||
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Johnson Tract |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Lucky Shot |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Dolly Varden |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
General exploration |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Total exploration |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Depreciation |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Accretion |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
General and administrative |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total expenses |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from equity investment in Peak Gold, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total income/(loss) from operations |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
OTHER INCOME/(EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Loss on derivative contracts |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Gain on metal sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total other expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
INCOME/(LOSS) BEFORE INCOME TAXES |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of September 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net Assets/(Deficit) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
23
Table of Contents
Three Months Ended September 30, 2025 |
|
Exploration |
|
|
Peak Gold JV |
|
|
Corporate and other reconciling items |
|
|
Consolidated |
|
||||
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Johnson Tract |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Lucky Shot |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
General exploration |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Total exploration |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Depreciation |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Accretion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total expenses |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from equity investment in Peak Gold, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total income/(loss) from operations |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
OTHER INCOME/(EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Loss on derivative contracts |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Gain on metal sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain on marketable securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Total other expense |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
INCOME/(LOSS) BEFORE INCOME TAXES |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nine Months Ended September 30, 2025 |
|
Exploration |
|
|
Peak Gold JV |
|
|
Corporate and other reconciling items |
|
|
Consolidated |
|
||||
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Johnson Tract |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Lucky Shot |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
General exploration |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Total exploration |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Depreciation |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
General and administrative |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total expenses |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from equity investment in Peak Gold, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total income/(loss) from operations |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
OTHER INCOME/(EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Loss on derivative contracts |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Gain on metal sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain on marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total other income/(expense) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
LOSS BEFORE INCOME TAXES |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net Assets/(Deficit) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
24
Table of Contents
19. Related Party Transactions
Peak Gold JV
The Peak Gold JV is a related party of the Company due to its
Onyx
The Company holds approximately
20. Subsequent Events
Subsequent to the end of the third quarter, on October 7, 2026, pursuant to the Amended and Restated Limited Liability Agreement, the Company received a $
25
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the accompanying notes and other information included in our Form 10-K for the year ended December 31, 2025, previously filed with the SEC.
Cautionary Statement about Forward-Looking Statements
Some of the statements made in this report may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words and phrases “should be”, “will be”, “believe”, “expect”, “anticipate”, “estimate”, “forecast”, “goal” and similar expressions identify forward-looking statements and express our expectations about future events. Any statement that is not historical fact is a forward -looking statement. These include such matters as:
Although the Company believes the expectations reflected in such forward-looking statements are reasonable, such expectations may not occur. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, that may cause our actual results, performance or achievements to be materially different from future results expressed or implied by the forward-looking statements. In addition to the risk factors described in Part II, Item 1A. Risk Factors, of this Form 10-Q and Part I, Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2025, these factors include among others:
26
Table of Contents
You should not unduly rely on these forward-looking statements in this report, as they speak only as of the date of this report. Except as required by law, the Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events. All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
2026 Highlights and Recent Developments
Dolly Varden Merger
On December 7, 2025, Contango and Dolly Varden entered into the Arrangement Agreement, which was subsequently amended on February 11, 2026. Pursuant to the Arrangement Agreement, Contango agreed to acquire all of the issued and outstanding common shares of Dolly Varden in exchange for Contango common shares at an Exchange Ratio of 0.1652 Contango shares for each Dolly Varden share.
Dolly Varden was amalgamated under the Business Corporations Act (British Columbia) on January 30, 2012. Dolly Varden is a mineral exploration company focused on the acquisition and exploration of mineral properties in Canada.
Dolly Varden’s primary asset is its 100%‑owned Kitsault Valley Project, which includes the Dolly Varden property and the Homestake Ridge property, located in the Golden Triangle of British Columbia, Canada, approximately 25 kilometers by road to tidewater. The 163‑square‑kilometer Kitsault Valley Project hosts high‑grade silver and gold resources and includes the past‑producing Dolly Varden and Torbrit silver mines.
In addition to the Kitsault Valley Project, Dolly Varden has consolidated a land package of six additional exploration properties in the same region. These properties have historically been explored for gold, copper, silver, lead and zinc. Including the Kitsault Valley Project and these additional properties, Dolly Varden holds mineral tenures totaling approximately 100,000 hectares within the region.
Immediately prior to the closing of the Arrangement, all outstanding restricted share units of Dolly Varden vested and were settled for Dolly Varden Shares. All outstanding Dolly Varden Options were exchanged for Contango stock options, adjusted to reflect the Exchange Ratio.
Eligible Canadian stockholders of Dolly Varden were entitled to elect to receive exchangeable shares in a Canadian subsidiary of Contango, which are exchangeable on a one for one basis into Contango common shares, in lieu of receiving Contango Shares directly.
27
Table of Contents
On March 17, 2026, the shareholders of Dolly Varden and Contango voted to approve the acquisition, which was subsequently approved by the Supreme Court of British Columbia on March 23, 2026. The acquisition was completed on March 26, 2026, following the satisfaction of all remaining legal and regulatory requirements.
Manh Choh Project
In July 2024, the Peak Gold JV commenced processing ore at the Fort Knox facility and on July 8, 2024, the Manh Choh Project achieved a significant milestone and poured its first gold bar, on schedule. The Company received $40.5 million and $102.0 million in cash distributions from the Peak Gold JV relating to production at Manh Choh during 2024 and 2025, respectively. During the first and second quarters of 2026, the Company received $9.0 million in cash distributions from the Peak Gold JV, for each quarter, respectively, resulting in $18.0 million in total cash distributions for the nine months ended September 30, 2026. On October 7, 2026, the Company received a $6.0 million cash distribution related to the third quarter production at Manh Choh, bringing the total cash distributions to $24 million relating to production at Manh Choh during 2026.
The third production campaign for 2026 from the Manh Choh mine began on August 20, 2026 and concluded on September 24, 2026. In its September 8, 2026 update, the Company reported that Fort Knox modifications for higher-grade South Pit sulfide ore had been implemented and were performing as planned. Gold production for the quarter came in below budget due to several factors including:
During the first quarter of 2026, the Peak Gold JV (on a 100% basis) processed 187,479 tons of ore with an average grade of 0.125 ounces (“oz”) per ton, containing approximately 23,435 oz of gold. Gold recovery averaged 88.5%, resulting in approximately 20,600 oz of recovered gold, of which Contango’s 30% share amounted to 6,187 oz of gold. During the first quarter of 2026, a total of 8,012 oz of gold and 15,042 oz of silver were delivered to Contango and sold.
During the second quarter of 2026, the Peak Gold JV (on a 100% basis) processed 253,494 tons of ore with an average grade of 0.145 oz per ton, containing approximately 36,760 oz of gold. Gold recovery averaged 80.4%, resulting in approximately 29,500 oz of recovered gold, of which Contango’s 30% share amounted to 8,866 oz of gold. During the second quarter of 2026, a total of 8,627 oz of gold and 10,319 oz of silver were delivered to Contango and sold.
During the third quarter of 2026, the Peak Gold JV (on a 100% basis) mined 304,102 tons of ore (16% increase from the second quarter), and processed 203,720 tons of ore with an average grade of 0.145 oz per ton, containing approximately 30,000 oz of gold. Gold recovery averaged 86.5%, resulting in approximately 25,300 oz of recovered gold, of which Contango’s 30% share amounted to 7,595 oz of gold. During the third quarter of 2026, a total of 7,333 oz of gold and 5,349 oz of silver were delivered to Contango and sold.
Kitsault Valley Project
The September 11, 2026 Kitsault Valley mineral resource estimate ("MRE") comprised 7.66 million tonnes of indicated resources containing 58.70 million oz of silver and 394.70 thousand oz of gold, and approximately 6.31 million tonnes of inferred resources containing 22.80 million oz of silver and 620.82 thousand oz of gold. Reported silver equivalent ("AgEq") inventories are 89.55 and 64.92 million oz, respectively. No measured resources or mineral reserves are reported. Mineral resources have no demonstrated economic viability, and inferred resources cannot be directly converted into reserves. Refer to the September 21, 2026 Kitsault Valley TRS, Section 11.7, Tables 11-53 to 11-57, filed with the September 22, 2026 Current Report on Form 8-K. The estimate uses drilling completed through 2025; 2026 drilling is excluded. Seven updated deposits use a 132 g/t AgEq cutoff, while South Reef retains its historical 2.0 g/t AuEq cutoff. Metal-equivalent values use the prices and deposit-specific recovery assumptions described in TRS Section 11.4. Resources are in-situ estimates before mining dilution and recovery; contained metal and AgEq are not estimates of payable production. The technical report identifies Dave Larimer, a Company employee, as the responsible qualified person.
The 2026 drilling scope expanded from 40,000 meters to more than 56,000 meters. The September 15, 2026 results included DV26-480 with 13.90 meters at 506 g/t AgEq and DV26-494 with 4.96 meters at 807 g/t AgEq. Intervening holes showed mineralization consistent with a possible geological connection between Torbrit and North Star, but assays were pending and continuity of grade and economic mineralization remained unestablished. Intervals are downhole lengths; true widths require further validation. For these southern-area exploration assays, AgEq = Ag + 11.64 x Pb + 15.22 x Zn + 58.27 x Au (Ag and Au in g/t; Pb and Zn in %), using $53/oz Ag, $3,500/oz Au, $0.90/lb Pb and $1.25/lb Zn with assumed recoveries of 85%, 75%, 85% and 80%, respectively. These assay
28
Table of Contents
equivalents are distinct from the resource model's deposit-specific assumptions. The results do not establish mineral reserves or economic viability.
Johnson Tract Project
During the second quarter of 2026, activities at the Johnson Tract Project focused on planning, resourcing, permitting coordination, and logistical preparations in support of the Company’s planned 2026 field program. On December 1, 2025, the Johnson Tract Critical Metals Project was posted to the Federal Permitting Dashboard as a covered project under Title 41 of the Fixing America’s Surface Transportation Act, commonly referred to as FAST-41. The Federal Permitting Improvement Steering Council announced the project’s FAST-41 coverage on December 2, 2025. The U.S. Army Corps of Engineers ("Corps") is identified as the lead federal permitting agency for the project. The FAST-41 permitting timetable was separately announced on January 30, 2026. FAST-41 provides coordination and does not itself grant project permits.
As reported on September 8, 2026, environmental and cultural surveys were largely completed within the Johnson Tract and project easements and the baseline program was substantially advanced. The program includes:
As reported on September 8, 2026, geotechnical investigations within the foreshore have been completed and investigations along the proposed coastal road are substantially complete.
During the third quarter, the Company also completed construction of a 2.6-mile access road connecting the existing camp to the proposed portal site, along with the portal lay down area. This work is critical in supporting construction of the underground exploration drift, which is scheduled to begin in 2027. As a result of cost efficiencies achieved during the field season, the Company also completed construction of a new camp pad, which had originally been planned for 2027. Completion of the pad this year advances site preparation ahead of schedule and allows the Company to begin selecting engineering consultants for the new camp, which is targeted for 2027. As of September 30 2026, the construction of the access road represented a capitalized cost of $10.4 million that will be amortized once the asset is commissioned for use.
The Johnson Tract Initial Assessment, effective May 12, 2025 and as amended January 12, 2026, reports post-tax NPV at a 5% discount rate of $224.5 million and IRR of 30.2% at $2,200/oz gold. It includes inferred resources representing approximately 1.3% of life-of-mine tonnage. Excluding inferred resources, the reported NPV at 5% and IRR are $216.4 million and 29.5%. This assessment is preliminary; inferred resources are geologically too speculative for reserve classification, and there is no certainty that the economic results will be achieved. These results do not establish mineral reserves.
Lucky Shot Property
The initial underground drilling phase comprised 65 HQ diamond holes totaling approximately 6,020 meters. Further surface drilling, underground access and KM vein drilling are intended to support an updated resource estimate targeted for the first half of 2027, followed by feasibility evaluation. A possible direct-shipping-ore operation targeting 40,000-50,000 ounces of gold annually remains a study concept, subject to technical results, permitting, financing and a future decision; it is not a demonstrated reserve-based production plan.
The June results included a selected 0.17-meter downhole interval at 972.10 grams per tonne ("g/t") gold in LSU26091. This narrow result is not a representative bulk grade or demonstrated mining width. Visible gold is a logging observation; pending samples require assay validation before grade conclusions are drawn. The geological continuity and mineability of the mineralization remain under evaluation. Underground exploration-access work resumed with GMS. The Company is evaluating the KM vein system identified during initial underground drilling.
The 2026 surface drilling program at Lucky Shot was completed on August 31, 2026, with approximately 5,800 meters in 27 holes from five pads. Results released on September 2, 2026 included hole LSS26016 with 2.45 meters at 86.05 g/t gold. Subsequent to the end of the third quarter, results released on October 6, 2026 included LSS26018 with 0.63 meters at 140.23 g/t gold and LSS26021 with 3.65 meters at 18.16 g/t gold. These are selected downhole intervals; true widths are not established. Other reported holes lacked significant intersections and additional assays remained pending. These exploration results do not establish resources, reserves or economic viability.
29
Table of Contents
KM vein drilling began September 16, 2026, within the third quarter. The October 6, 2026 update described approximately 1,140 meters in 17 planned holes from five stations, with ten holes completed from the first two stations and work continuing from Station 346.
This program evaluates KM vein geometry and its interpreted structural relationship to the Lucky Shot Fault and vein system. Assays are expected in the fourth quarter after receipt and validation. Geological observations and pending samples do not establish grade continuity, a resource update or economic viability.
During the nine months ended September 30, 2026, the Company recorded additions of approximately $13.7 million to mineral properties at the Lucky Shot Property, reflecting the purchase of the underlying lease and 2% net smelter return royalty under the LSA Purchase Agreement and the settlement of the contingent milestone consideration payable to CRH (see Note 11 - Commitments and Contingencies).
Strategy and Asset Management
Partnering with strategic industry participants to expand future exploration work. As of October 1, 2020, in conjunction with the Peak Gold JV acquisition and the signing of the Amended and Restated Limited Liability Company Agreement of the Peak Gold JV ( as amended, the "A&R JV LLCA"), KG Mining became the manager of the Peak Gold JV (the “Manager”). KG Mining may resign as Manager and can be removed as Manager for a material breach of the A&R JV LLCA, a material failure to perform its obligations as the Manager, a failure to conduct the Peak Gold JV operations in accordance with industry standards and applicable laws, and other limited circumstances. Except as expressly delegated to the Manager, the A&R JV LLCA provides that the JV Management Committee has exclusive authority to determine all management matters related to the Company. The JV Management Committee currently consists of one appointee designated by the Company and two appointees designated by KG Mining. The Representatives designated by each member of the Peak Gold JV vote as a group, and in accordance with their respective membership interests in the Peak Gold JV. Except in the case of certain actions that require approval by unanimous vote of the Representatives, the affirmative vote of a majority of the membership interests in the Peak Gold JV constitutes the action of the JV Management Committee.
Structuring Incentives to Drive Behavior. The Company believes that equity ownership aligns the interests of the Company’s executives and directors with those of its stockholders. The Company has implemented an equity compensation program for its executive officers and directors (and other persons) that provides an incentive for such officers to achieve the Company’s long-term business objectives. The Company’s equity compensation program includes two forms of long-term incentives: restricted stock and stock options. As of September 30, 2026, the Company’s directors and executives beneficially own approximately 5.3% of the Company’s common stock.
Acquiring exploration properties. The Company anticipates from time to time acquiring additional properties in Alaska for exploration, subject to the availability of funds. The acquisitions may include leases or similar rights from Alaska Native corporations and/or staking Federal or State of Alaska mining claims. Acquiring additional properties will likely result in additional expense to the Company for minimum royalties, minimum rents and annual exploratory work requirements. The Company is open to strategic partnerships or alliances with other companies as a means to enhance its ability to fund new and existing exploration and development opportunities.
Results of Operations
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
Exploration Expense. Exploration expense for the three months ended September 30, 2026 was $26.9 million compared to $2.1 million for the three months ended September 30, 2025. Current period exploration expense primarily relates to the advances on the 20,000 meter underground and surface drilling program on the Lucky Shot Property, the 56,000 meter drilling program on the Kitsault Valley Project (obtained through the Dolly Varden acquisition completed in the first quarter of 2026) and permitting activities and road costs on the Johnson Tract Property. The prior period exploration expense related primarily to the permitting process for the underground exploration drift and baseline environmental work at the Johnson Tract Project.
General and Administrative Expense. General and administrative expense for the three months ended September 30, 2026 and 2025 was $4.0 million and $2.5 million, respectively. The Company’s general and administrative expense primarily relates to professional fees, regulatory fees, marketing and investor relations, payroll and stock-based compensation expense. The increase was primarily due to the expanded scale of the Company’s operations, following the acquisition of Dolly Varden, including higher payroll, professional fees and regulatory costs.
30
Table of Contents
Income from Equity Investment in the Peak Gold JV. The income from the Company’s equity investment in the Peak Gold JV for the three months ended September 30, 2026 was $6.9 million compared to income of $29.5 million for the same period in 2025. The decrease was mainly driven by a reduction in the revenue generated by the Peak Gold JV, reflecting fewer ounces sold and higher diesel costs related to ore transportation from Manh Choh to Fort Knox and increased reagents and consumables required in the mill to process the higher copper and sulfide content during 2026 compared to 2025. During the third quarter of 2026, production at Manh Choh focused on mining and processing lower grade ore and processing less tons from the North Pit as Manh Choh transitioned to the higher-grade portions of the South Pit.
Interest Expense. For the three months ended September 30, 2026, interest expense was $1.6 million and primarily related to the Queen's Road Capital Investment, Ltd. Debenture (the "Debenture") and interest on the Company’s cumulative net draw-down of $45.3 million on the secured credit facility. Prior year interest expense of $1.7 million primarily related to the Debenture and interest on the Company's cumulative net draw-down of $23.1 million on the secured credit facility (see Note 13 - Debt).
Gain/(Loss) on Metal Sales. For the three months ended September 30, 2026 and 2025, the gain/(loss) on metal sales was $0.1 million loss and $2.2 million gain, respectively. These amounts are related to (i) excess ounces purchased from the Peak Gold JV that were not delivered into the hedges and were instead sold to the derivative counterparties, and (ii) hedged volumes sold at spot prices with an obligation to repurchase the ounces at fixed prices prior to delivery into the hedges. During the three months ended September 30, 2026, the Company sold 7,333 ounces at an average spot price of $4,255 compared to 16,669 ounces sold at an average spot price of $3,647 during the three months ended September 30, 2025.
Loss on Derivative Contracts. The $2.0 million loss on derivative contracts for the three months ended September 30, 2026 consisted of an unrealized gain of $44.8 million and a realized loss of $46.8 million, which included $33.0 million paid to settle 15,000 ounces of hedge contracts with maturities ranging between March and June 2027. This compares to a $30.3 million loss on derivative contracts consisting of an unrealized loss of $14.4 million and a realized loss of $15.9 million for the three months ended September 30, 2025. The period over period variance primarily reflects changes in the fair value of derivative contracts driven by increases in spot gold prices and corresponding changes in the forward curves used to value the contracts, and the completion of deliveries under the derivative arrangements.
During the three months ended September 30, 2026, the Company delivered 4,000 gold ounces into the derivative contracts and cash settled the remaining 15,000 ounces that matured on March and June 2027. During the three months ended September 30, 2025, the Company delivered 11,900 gold ounces into the derivative contracts (see Note 14 - Derivative and Hedging Activities).
Gain/(Loss) on Marketable Securities. For the three months ended September 30, 2026, the unrealized gain on marketable securities totaled $0.5 million and was primarily due to changes in the fair value of the Company's investment in Onyx, compared to an unrealized loss of $1.0 million for the three months ended September 30, 2025.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Exploration Expense. Exploration expense for the nine months ended September 30, 2026 was $43.3 million compared to $3.8 million for the nine months ended September 30, 2025. Current period exploration expense primarily relates to the advances on the 20,000 meter underground and surface drilling program on the Lucky Shot Property, the 56,000 meter drilling program on the Kitsault Valley Project and permitting activities and road costs on the Johnson Tract Property. The prior period exploration expense related primarily to the permitting process for the underground exploration drift and baseline environmental work at the Johnson Tract Project.
General and Administrative Expense. General and administrative expense for the nine months ended September 30, 2026 and 2025 was $13.1 million and $8.1 million, respectively. The Company’s general and administrative expense primarily relates to professional fees, regulatory fees, marketing and investor relations, payroll and stock-based compensation expense. The increase was primarily due to the expanded scale of the Company’s operations, following the acquisition of Dolly Varden, including higher payroll, professional fees and regulatory costs.
Income from Equity Investment in the Peak Gold JV. The income from the Company’s equity investment in the Peak Gold JV for the nine months ended September 30, 2026 was $28.9 million compared to income of $79.2 million for the same period in 2025. The decrease was mainly driven by a reduction in the revenue generated by the Peak Gold JV, reflecting fewer ounces sold and higher diesel costs related to ore transportation from Manh Choh to Fort Knox and increased reagents and consumables required in the mill to process the higher copper and sulfide content during 2026 compared to 2025. During 2026, production at Manh Choh focused on mining and processing lower grade ore and processing less tons from the North Pit as Manh Choh transitioned to the higher-grade portions of the South Pit.
Interest Expense. For the nine months ended September 30, 2026, interest expense was $3.5 million and primarily related to the Debenture and interest on the Company’s cumulative net draw-down of $45.3 million on the secured credit facility. Prior year interest expense of $6.5 million primarily related to the Debenture and interest on the Company's cumulative net draw-down of $23.1 million on the secured credit facility (see Note 13 - Debt).
31
Table of Contents
Gain/(Loss) on Metal Sales. For the nine months ended September 30, 2026 and 2025, the gain on metal sales was $1.1 million and $4.3 million, respectively. These gains primarily related to (i) excess ounces purchased from the Peak Gold JV that were not delivered into the hedges and were instead sold to the derivative counterparties, and (ii) hedged volumes sold at spot prices with an obligation to repurchase the ounces at fixed prices prior to delivery into the hedges. During the nine months ended September 30, 2026, the Company sold 23,974 ounces at an average spot price of $4,509 compared to 51,574 ounces sold at an average spot price of $3,300 during the nine months ended September 30, 2025.
Loss on Derivative Contracts. The $10.7 million loss on derivative contracts for the nine months ended September 30, 2026 consisted of an unrealized gain of $87.0 million and a realized loss of $97.7 million, which included $79.4 million paid to settle 30,446 ounces of hedge contracts with maturities ranging between March and September 2026, and March and June 2027. This compares to a $83.7 million loss on derivative contracts consisting of an unrealized loss of $57.0 million and a realized loss of $26.7 million for the nine months ended September 30, 2025. The period over period variance primarily reflects changes in the fair value of derivative contracts driven by increases in spot gold prices and corresponding changes in the forward curves used to value the contracts, and the completion of deliveries under the derivative arrangements.
During the nine months ended September 30, 2026, the Company delivered and cash settled the remaining 43,000 gold ounces into the derivative contracts including the carry trade with maturity dates of March 31, 2026, September 30, 2026 and December 31, 2026. During the nine months ended September 30, 2025, the Company delivered 23,839 gold ounces into the derivative contracts (see Note 14 - Derivative and Hedging Activities).
Gain/(Loss) on Marketable Securities. For the nine months ended September 30, 2026, the unrealized gain on marketable securities totaled $0.3 million and was primarily due to changes in the fair value of the Company's investment in Onyx, compared to an unrealized gain of $5.7 million for the nine months ended September 30, 2025.
Cash Cost on a By-Product Basis and All-In Sustaining Costs on a By-Product Basis (non-GAAP)
The table below presents reconciliations between the most comparable GAAP measure of total cost of sales to the non-GAAP measures of (i) Cash Cost on a By-product Basis, per ounce sold and (ii) All-in Sustaining Costs ("AISC") on a By-product Basis, per ounce sold for the Peak Gold JV operations (Manh Choh) for the three and nine months ended September 30, 2026 and 2025.
Cash Cost on a By-product Basis, per Ounce sold and AISC on a By-product Basis, per Ounce sold are measures developed by precious metals companies (including the Silver Institute and the World Gold Council) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that these non-GAAP measures as we report them are the same as those reported by other mining companies.
Cash Cost on a By-product Basis includes all direct and indirect operating cash costs related directly to the physical activities of producing gold, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes. The value of silver sold is deducted from the total production cost of sales as it is considered residual production, i.e. a by-product.
AISC on a By-product Basis includes reclamation, sustaining capital, exploration and joint venture partner operator management costs.
Cash Cost on a By-product Basis, per Ounce sold is an important operating statistic that we utilize to measure a mine's operating performance. We use AISC on a By-product Basis, per Ounce sold as a measure of a mine's net cash flow after costs for reclamation and sustaining capital. This is similar to the Cash Cost on a By-product Basis, per Ounce sold measure we report, but also includes reclamation and sustaining capital costs. Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain gold production. Cash Cost on a By-product Basis, per Ounce sold and AISC on a By-product Basis, per Ounce sold also allow us to benchmark the performance of the Peak Gold JV versus those of our competitors. These statistics are useful in identifying acquisition and investment opportunities as they provide a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics.
The increase in costs in 2026 is primarily driven by increased diesel costs related to ore transportation from Manh Choh to Fort Knox and increased reagents and consumables required in the mill to process the higher copper and sulfide content. Additionally, the lower gold ounces processed during the year has resulted in higher cash costs and AISC per ounce of gold sold.
The fourth and final campaign for 2026 is expected to produce 13,000 to 15,000 ounces of gold at cash costs and AISC of $2,700 and $2,900, respectively. The Company is guiding towards the lower end of its 2026 production guidance of 40,000 gold equivalent ounces attributable to its 30% interest in the Peak Gold JV with 2026 cash costs and AISC of $2,700 and $2,900 per ounce of gold sold, respectively. A final cash distribution in the amount of $16 million is expected in the fourth quarter, in addition to the $6 million received on October 7, 2026, for a total of $40 million in cash distributions to be received for 2026.
32
Table of Contents
Cash Costs on a By-product Basis, per Ounce sold and AISC on a By-product Basis, per Ounce sold are calculated by adjusting production cost of sales, as reported on the interim condensed consolidated statements of operations, as follows:
|
|
Three Months |
|
|
Three Months |
|
|
Nine Months |
|
|
Nine Months |
|
||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Cash Cost on a By-Product Basis: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cost of sales |
|
$ |
78,044,601 |
|
|
$ |
92,875,525 |
|
|
$ |
259,795,796 |
|
|
$ |
285,277,975 |
|
Less: silver revenue |
|
|
(1,115,489 |
) |
|
|
(2,244,251 |
) |
|
|
(7,807,106 |
) |
|
|
(5,329,563 |
) |
Depreciation, depletion and amortization |
|
|
(10,946,221 |
) |
|
|
(13,858,844 |
) |
|
|
(38,170,836 |
) |
|
|
(42,047,076 |
) |
Total |
|
$ |
65,982,891 |
|
|
$ |
76,772,430 |
|
|
$ |
213,817,854 |
|
|
$ |
237,901,336 |
|
Sustaining capital |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sustaining capital - PPE |
|
$ |
295,950 |
|
|
$ |
6,638,883 |
|
|
$ |
5,171,426 |
|
|
$ |
11,279,017 |
|
Exploration costs |
|
|
2,273,397 |
|
|
|
2,261,510 |
|
|
|
2,626,326 |
|
|
|
4,458,793 |
|
Reclamation and other costs |
|
|
762,189 |
|
|
|
521,478 |
|
|
|
2,257,277 |
|
|
|
1,557,648 |
|
JV Partner operator management fee |
|
|
1,801,858 |
|
|
|
1,279,565 |
|
|
|
4,192,977 |
|
|
|
3,552,846 |
|
AISC on a By-Product basis |
|
$ |
71,116,285 |
|
|
$ |
87,473,866 |
|
|
$ |
228,065,860 |
|
|
$ |
258,749,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Divided by ounces sold |
|
|
24,445 |
|
|
|
54,760 |
|
|
|
79,913 |
|
|
|
171,916 |
|
Cash Cost on a By-product Basis, per Ounce Sold |
|
$ |
2,699 |
|
|
$ |
1,402 |
|
|
$ |
2,676 |
|
|
$ |
1,384 |
|
AISC on a By-product Basis, per Ounce Sold |
|
$ |
2,909 |
|
|
$ |
1,597 |
|
|
$ |
2,854 |
|
|
$ |
1,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liquidity and Capital Resources
As of September 30, 2026, the Company had approximately $56.6 million of cash and cash equivalents.
The Company’s primary cash requirements have been for general and administrative expenses, capital calls from the Peak Gold JV for the Manh Choh Project, repayment of principal and interest related to debt and exploration expenditures on the Johnson Tract Project, Lucky Shot Property and Kitsault Valley Project. The Company’s sources of cash have been from common stock offerings, the issuance of the Debenture, distributions from the equity investment, the proceeds from the Facility (see Note 5 - Investment in the Peak Gold JV, Note 8 - Stockholders' Equity and Note 13 - Debt, for a discussion of the recent activity), and the acquisition of Dolly Varden (see Note 16 - Acquisition).
The Manh Choh Project began production early in the third quarter of 2024 and on July 8, 2024, the Peak Gold JV poured its first gold bar. The Manh Choh Project remains on schedule and ore mining continues along with stockpiling of ore at the Fort Knox facility. Production from the Manh Choh Project has allowed the Peak Gold JV to operate from the cash flows generated from its operations and there are no future anticipated cash calls.
The Company’s cash needs going forward will primarily relate to exploration of the Contango Properties, repayment of debt and related interest and general and administrative expenses of the Company. During the first and second quarter of 2026, the Company received cash distributions totaling $9.0 million and $9.0 million, respectively. Subsequent to the end of the third quarter, the Company received an additional $6.0 million related to the third quarter campaign. Although there can be no guarantee that the Peak Gold JV will continue to make distributions to the Company, the Company believes that distributions are probable and that it will maintain sufficient liquidity to meet its working capital requirements, including repayment obligations of approximately $45.3 million on the Facility (see at Note 13 - Debt), for the next twelve months from the date of this report.
On February 12, 2026, the Company sold shares of common stock and pre-funded warrants and received gross proceeds of $50 million. The Company used the net proceeds of approximately $47.0 million to settle gold hedge contracts and purchase put options. Any remaining proceeds will be used for general corporate purposes, including working capital.
On July 1, 2026, the Company amended its Secured Credit Facility and received $33.7 million. The Company used the proceeds to settle its outstanding derivative position and acquire put options.
Beyond the next twelve months, the Company’s material cash requirements include (i) the repayment at maturity of the $20.0 million Debenture, which matures on May 26, 2028 (see Note 13 - Debt), and (ii) principal repayments totaling $10.0 million under the secured promissory note entered into in connection with the Lucky Shot Property acquisition, with $2.0 million due on each of the second and third anniversaries of the July 1, 2026 closing date and the remaining principal balance due on the fourth anniversary (see Note 11 - Commitments and Contingencies). The Company expects to fund these longer-term obligations through a combination of anticipated cash distributions from the Peak Gold JV, proceeds from metal sales, potential future equity issuances (including amounts available under its ATM Program), and available cash on hand. The Company may also consider refinancing alternatives or other capital markets transactions as they become available on commercially acceptable terms.
33
Table of Contents
Further financing by the Company may include issuances of equity, instruments convertible into equity (such as warrants) or various forms of debt. The Company has issued common stock and other instruments convertible into equity in the past and cannot predict the size or price of any future issuances of common stock or other instruments convertible into equity, and the effect, if any, that such future issuances and sales will have on the market price of the Company’s securities.
Off-Balance Sheet Arrangements
None.
Critical Accounting Estimates
The discussion and analysis of the Company’s financial condition and results of operations is based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. There were no material changes in the Company’s critical accounting estimates from those that were previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 other than the accounting policy described in Note 4 - Summary of Significant Accounting Policies.
Available Information
General information about the Company can be found on the Company’s website at www.contangoore.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website as soon as reasonably practicable after the Company files or furnishes them to the SEC. The content of the Company’s website is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document it files with the SEC, and any references to the Company’s website is intended to be inactive textual references only.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” the Company is not required to provide this information.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15(b) of the Exchange Act, the Company has evaluated, under the supervision and with the participation of its management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that the Company files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2026 at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
On September 10, 2024, the Corps issued to J T Mining Inc. (a wholly owned subsidiary of the Company) a permit under Section 404 of the Clean Water Act to construct an access road and improve an existing air strip on the south parcel of the Johnson Tract project. On May 20, 2025, Cook Inletkeeper, Chickaloon Village Traditional Council, Center for Biological Diversity, and an individual plaintiff filed suit in the United States District Court for the District of Alaska against the Corps and related officials, challenging the Corps’ issuance of the Section 404 permit. The plaintiffs seek to vacate the Section 404 permit issued and halt mineral exploration on the lands. The complaint alleges that the Corps Environmental Assessment for the Section 404 permit failed to adequately analyze the potential for acid rock drainage and contaminants leaching into the Johnson River and Cook Inlet and the harmful effects of the project on beluga whales at the Cook Inlet. In July 2025, the Company filed a motion to intervene as a defendant in the lawsuit to protect its legal rights under the Section 404 permit, its significant investment in the Johnson Tract, and its mineral exploration lease with CIRI. On September 14, 2026, the U.S. District Court for the District of Alaska denied the plaintiffs’ motion for summary judgment and granted the cross-motions for summary judgment filed by the federal defendants and J T Mining, Inc. in the lawsuit challenging the Johnson Tract Section
34
Table of Contents
404 permit. The court directed the Clerk of Court to enter final judgment and close the case. Final judgment in favor of the federal defendants and J T Mining, Inc. was entered on September 15, 2026. The court did not vacate the challenged permit.
Item 1A. Risk Factors
There have been no material changes in our risk factors from those described in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. Such risks are not the only risks the Company faces. You should carefully consider the risks discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, under the headings “Item 1. Business — Adverse Climate Conditions,” “—Competition,” “— Government Regulation” and “Item 2. Properties—Environmental Regulation and Permitting,” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” which risks could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. An investment in the Company is subject to risks inherent in our business and involves a high degree of risk. The trading price of the shares of the Company is affected by the performance of our business relative to, among other things, competition, market conditions and general economic and industry conditions. The value of an investment in the Company may decrease, resulting in a loss.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 4. Mine Safety Disclosures
Pursuant to Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K, registrants that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose specified information about mine health and safety in their periodic reports. These reporting requirements are based on the safety and health requirements applicable to mines under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) which is administered by the U.S. Department of Labor’s Mine Safety and Health Administration (“MSHA”).
The Company holds a 30% membership interest in the Peak Gold JV, which owns the Manh Choh Project in Alaska. The Company does not serve as the manager of the Peak Gold JV or the operator of the Manh Choh mine. KG Mining (Alaska), Inc., an indirect wholly-owned subsidiary of Kinross Gold Corporation, serves as manager of the Peak Gold JV, which operates the Manh Choh mine. Accordingly, the Company is not considered an “operator” with respect to the Manh Choh Project as defined under Section 3 of the Mine Act.
The Company’s other mineral properties, including the Lucky Shot Project, Kitsault Valley Project, Johnson Tract Project, and the Avidian Properties, are exploration-stage properties for S-K 1300 purposes where no mineral reserves have been disclosed. Physical underground exploration development does not change that classification. At the Lucky Shot Project, where the Company conducts exploration activities at these properties, including underground drilling programs, the Company received one citation from the MSHA for late filing of MSHA Form 7000-2 (Quarterly Mine Employment and Coal Production Report) reporting employee hours worked on site. The Form 7000-2 report was filed approximately 30 days late due to a miscommunication with the local MSHA office. Although Lucky Shot is not currently in production, MSHA reporting obligations applied to these activities.
Except for the citation described above, during the nine months ended September 30, 2026, and for all periods thereafter through the filing date of this Form 10-Q, the Company and its properties were not subject to any of the matters requiring disclosure under Section 1503(a) of the Dodd-Frank Act or Item 104 of Regulation S-K, including: (i) notices of violations of mandatory health or safety standards issued under Section 104 of the Mine Act; (ii) orders issued under Sections 104(b) or 107(a) of the Mine Act; (iii) citations or orders for unwarrantable failure to comply with mandatory health or safety standards under Section 104(d) of the Mine Act; (iv) flagrant violations under Section 110(b)(2) of the Mine Act; (v) imminent danger orders issued under Section 107(a) of the Mine Act; (vi) proposed assessments from MSHA; (vii) legal actions pending before the Federal Mine Safety and Health Review Commission; (viii) legal actions instituted by MSHA; or (ix) mining-related fatalities.
Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this Form 10-Q.
Item 5. Other Information
During the three months ended September 30, 2026, no director or officer of the Company
35
Table of Contents
Item 6. Exhibits
(a) Exhibits:
The following is a list of exhibits filed as part of this Form 10-Q. Where so indicated, exhibits, which were previously filed, are incorporated herein by reference (File No. 001-35770, unless otherwise indicated).
|
|
|
|
|
|
Incorporated by Reference |
||||||
Exhibit |
|
Description |
|
Filed Herewith |
|
Form |
|
File No. |
|
Ex. |
|
Filing Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
Certificate of Incorporation of Contango ORE, Inc. |
|
|
|
10/A2 |
|
000-54136 |
|
3.1 |
|
11/26/2010 |
3.2 |
|
Certificate of Amendment to Certificate of Incorporation of Contango ORE, Inc. |
|
|
|
8-K |
|
001-35770 |
|
3.1 |
|
12/17/2020 |
3.3 |
|
Certificate of Amendment to Certificate of Incorporation of Contango ORE, Inc. |
|
|
|
8-K |
|
001-35770 |
|
3.1 |
|
03/27/2026 |
3.4 |
|
Certificate of Designation of Series A Special Voting Preferred Stock. |
|
|
|
8-K |
|
001-35770 |
|
3.2 |
|
03/27/2026 |
3.5 |
|
Amended and Restated Bylaws of Contango Silver & Gold Inc. |
|
|
|
8-K |
|
001-35770 |
|
3.1 |
|
08/19/2026 |
10.1 |
|
Consent No. 7 and Amendment No. 13 to Credit and Guarantee Agreement, dated as of July 1, 2026, among CORE Alaska, LLC, Contango Silver & Gold Inc., the other Guarantors party thereto, and ING Capital LLC, as administrative agent. |
|
|
|
8-K |
|
001-35770 |
|
10.1 |
|
07/08/2026 |
31.1 |
|
Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14. |
|
X |
|
|
|
|
|
|
|
|
31.2 |
|
Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14. |
|
X |
|
|
|
|
|
|
|
|
32.1 |
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350. |
|
X |
|
|
|
|
|
|
|
|
32.2 |
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350. |
|
X |
|
|
|
|
|
|
|
|
95.1 |
|
Mine Safety Disclosures. |
|
X |
|
|
|
|
|
|
|
|
101 |
|
Financial statements from the Company’s quarterly report on Form 10-Q for the nine months ended September 30, 2026, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Cash Flows; (iv) Condensed Consolidated Statements of Changes in Shareholders’ Equity; and (v) Notes to Unaudited Condensed Consolidated Financial Statements. |
|
X |
|
|
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
36
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
|
CONTANGO SILVER & GOLD INC. |
||
|
|
|
|
Date: November 13, 2026 |
By: |
|
/s/ RICK VAN NIEUWENHUYSE |
|
|
|
Rick Van Nieuwenhuyse |
|
|
|
Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
Date: November 13, 2026 |
By: |
|
/s/ MIKE CLARK |
|
|
|
Mike Clark |
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
37