Contango Silver & Gold Inc.: Form 10-Q for the period ended Jun 30, 2025

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, 2024, 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:

• The Company’s financial position;
• Business strategy, including outsourcing;
• Meeting the Company's forecasts and budgets;
• Anticipated capital expenditures and the availability of future financing;
• Risk in the pricing or timing of hedges the Company has entered into for the production of gold and associated minerals;
• Prices of gold and associated minerals;
• Timing and amount of future discoveries (if any) and production of natural resources on the Contango Properties and the Peak Gold JV Property;
• Operating costs and other expenses;
• Cash flow and anticipated liquidity;
• The Company’s ability to fund its business with cash flows from operations and current cash reserves;
• Prospect development;
• Operating and legal risks;
• New governmental laws and regulations; and
• Pending and future litigation.

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, 2024, these factors include among others:

• Availability and ability to raise capital to fund capital expenditures;
• Ability to repay indebtedness when due;
• Ability to retain or maintain capital contributions to, and our relative ownership interest in the Peak Gold JV;
• Ability to influence management of the Peak Gold JV;
• Ability to consummate and realize the anticipated benefits of strategic transactions;
• Potential delays or changes in plans with respect to exploration or development projects or capital expenditures;
• Operational constraints and delays;
• Exploration and operational risks associated with the mining industry;
• Timing and successful discovery of natural resources;
• Declines and variations in the price of gold and associated minerals, as well as price volatility for natural resources;
• Availability and costs of material and operating equipment;
• Potential mechanical failure or under performance of facilities and equipment;
• Weather;
• Ability to find and retain skilled personnel;
• Worldwide economic conditions;
• Federal and state legislation and regulation that affects or restricts mining development and activities;
• Impact of new and potential mining operating and safety standards;
• Environmental and regulatory, health and safety risks;
• Uncertainties of any estimates and projections relating to any future production, costs and expenses (including changes in the cost of fuel, power, materials, and supplies);
• Timely and full receipt of sale proceeds from the sale of any of our mined products (if any);
• Stock price and interest rate volatility;
• Actions or inactions of third-parties;
• Strength and financial resources of competitors;
• Competition generally and the increasing competitive nature of the mining industry;
• Expanded rigorous monitoring and testing requirements;
• Ability to obtain insurance coverage on commercially reasonable terms; and
• Risks related to title to properties.

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.

First and Second Quarter 2025 Highlights and Recent Developments

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. In 2024, the Company received $40.5 million in cash distributions from the Peak Gold JV relating to production at Manh Choh, followed by $54.0 million received in the first half of 2025.

During the first quarter of 2025, the Peak Gold JV (on a 100% basis) processed 323,000 tons of ore with an average grade of 0.215 ounces (“oz”) per ton and containing approximately 69,500 oz of gold. Gold recovery averaged 93.5%, resulting in approximately 65,000 oz of recovered gold, of which Contango’s 30% share amounted to 19,500 oz of gold. During the first quarter of 2025, 17,382 ounces of gold were delivered to Contango and sold during the period.

During the second quarter of 2025, the Peak Gold JV (on a 100% basis) processed 255,000 tons of ore with an average grade of 0.222 oz per ton and containing approximately 56,000 oz of gold. Gold recovery averaged 93%, resulting in approximately 52,000 oz of recovered gold, of which Contango’s 30% share amounted to 15,700 oz of gold. During the second quarter of 2025, 17,764 ounces of gold were delivered to Contango and sold during the period. As of June 30, 2025, 750 ounces of gold remain in recoverable inventory in the Peak Gold JV and 241 ounces in the Company.

Johnson Tract Project

During the second quarter of 2025, the Company continued with ongoing work to permit the underground exploration drift and baseline environmental work. On January 15, 2025, the transportation and port easements were conveyed to CIRI by the National Parks Service and a Decision Record was issued.

On May 6, 2025, the Company announced that it had completed a Technical Report Summary ("TRS") on the Johnson Tract Project. The TRS summarizes the results of an Initial Assessment (“IA”) of the potential viability for a seven-year life of mine (“LOM”), underground mining operation, utilizing the same direct ship ore (“DSO”) approach as the Manh Choh mine. The TRS was filed on May 12, 2025.

IA HIGHLIGHTS:

• Pre-Tax net present value discounted at 5% (“NPV5”) of $359.0 million
• Pre-Tax Internal Rate of Return (“IRR”) of 37.4%
• Post-Tax NPV5 of $224.5 million with a post-tax IRR of 30.2%
• Seven-year LOM
• LOM annual average production of 102,258 gold equivalent ounces ("GEO") at 7.58 grams per tonne ("g/t")
• Initial Capital costs of $213.6 million, including $36 million for contingency costs
• Sustaining Capital costs of $61.3 million, including $12.3 million for contingency costs
• All-In Sustaining Costs ("AISC") estimated at $860 per GEO sold
• Non-discounted payback period 1.3 years

Lucky Shot Property

The Lucky Shot project remains in care and maintenance.

Committee for Safe Communities Complaint

On October 20, 2023, the Committee for Safe Communities ("CSC"), an Alaskan non-profit corporation inclusive of certain vacation home owners along the Manh Choh ore haul route, formed for the purpose of opposing the Manh Choh project, filed suit in the Superior Court in Fairbanks, Alaska against the State of Alaska Department of Transportation and Public Facilities ("DOT"). The Complaint sought injunctive relief against the DOT with respect to its oversight of the Peak Gold JV's ore haul plan. On May 9, 2025, and at CSC’s request, the Court entered an Order of Dismissal Without Prejudice as to CSC’s one remaining claim, vacated the trial date and closed the case.

Dot Lake Complaint

On July 1, 2024, the Village of Dot Lake, a federally recognized Indian Tribe, located approximately 50 miles from the Manh Choh mine on the ore haul route along the Alaska Highway ("Dot Lake"), filed a Complaint in the U.S. District Court for the District of Alaska against U.S. Army Corps of Engineers (the "Corps") and Lt. General Scott A. Spellmon, in his official capacity as Chief of Engineers and Commanding General of the Corps. The Complaint seeks declaratory and injunctive relief based on the Corps' alleged failure to consult with Dot Lake and to undertake an adequate environmental review with respect to the Corps' issuance in September 2022 of a wetlands disturbance permit in connection with the overall permitting of the Manh Choh mine as to approximately five acres of wetlands located on Tetlin Village land. The Peak Gold JV was not named as a defendant in the Complaint and, on August 20, 2024, moved to intervene in the action, which Dot Lake opposed. On October 10, 2024, the Court granted intervention to the Peak Gold JV. On October 18, 2024, the Peak Gold JV joined the partial motion to dismiss that the Corps filed on August 23, 2024. On March 19, 2025, the Court entered an Order on Motion to Partially Dismiss, which Order dismissed three of the four claims asserted in the Complaint. On April 1, 2025, Dot Lake filed an Amended Complaint which sought to reassert one of the claims that was dismissed without prejudice. On May 2, 2025, the Peak Gold JV filed a Motion to Dismiss this reasserted claim. On July 31, 2025, the Court dismissed the reasserted claim with prejudice and without leave to amend.

Cook inlet Keeper, Chickaloon Village Traditional Counsel, Center for Biological Diversity.

On September 10, 2024, the Corps issued to Johnson Tract Mining Inc, (a wholly owned subsidiary of Contango Ore) 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. Plaintiffs seek to vacate the section 404 permit issued and halt mineral exploration on the lands. The Complaint is the Corps Environmental Assessment for the Clean Water Act 404 permit granted in September 2024 for the mine exploration project 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 Cook Inlet beluga whales. In July 2025, Contango Ore 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. The Alaska District court has not issued any rulings or relief and the permit in question is still active and in good standing. Management expects to be successful with this litigation.

Strategy and Asset Management

Partnering with strategic industry participants to expand future exploration work. As of October 1, 2020, in conjunction with the Kinross Transactions and the signing of 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 June 30, 2025, the Company’s directors and executives beneficially own approximately 14.6% 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 June 30, 2025 Compared to Three Months Ended June 30, 2024

Claim Rentals Expense. Claim rental expense primarily consists of State of Alaska rental payments and costs incurred to record annual labor documents. For the three months ended June 30, 2025 and 2024, claim rental expense were $0.1 million and $0.1 million, respectively.

Exploration Expense. Exploration expense for the three months ended June 30, 2025 was $1.0 million compared to $nil million for the three months ended June 30, 2024. Current period exploration expense primarily relates to the permitting process for the underground exploration drift and baseline environmental work at the Johnson Tract Project, which are part of the IA. The prior period exploration expense relates to care and maintenance work performed on the Lucky Shot Property.

General and Administrative Expense. General and administrative expense for the three months ended June 30, 2025 and 2024 was $3.1 million and $2.2 million, respectively. The Company’s general and administrative expense primarily relates to professional fees, regulatory fees, payroll and stock-based compensation expense. The increase is mainly driven by expenditures carried for marketing and investor relations, increased legal costs and professional fees associated with regulatory filings and the Facility restructure.

Income / Loss 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 June 30, 2025 was $27.3 million compared to a loss of $0.7 million for the same period in 2024. The Manh Choh Project commenced production in July 2024, which generated income for the second half of 2024 and the first half of 2025. As of June 30, 2025, accounts payable includes $1.7 million owed to Peak Gold JV.

Interest Expense. For the three months ended June 30, 2025, interest expense was $2.0 million and primarily related to the Queen's Road Capital Investment, Ltd. Debenture (the "Debenture") and interest expense related to the Company’s cumulative $30.1 million net draw-down on the Facility. Prior year interest expense of $2.9 million included interest expense related to the Debenture and interest expense related to the Company's cumulative $60 million net draw-down on the Facility (see Note 13 - Debt).

Metal Sales. For the three months ended June 30, 2025, the gain on metal sales was $1.0 million and related to excess ounces that were purchased from the Peak Gold JV that were not delivered into the hedges and sold to the derivative counterparties and hedged volumes sold at spot with obligation to repurchase at fixed price before delivering into hedges. There were no metal sales for the three months ended June 30, 2024.

Loss on Derivative Contracts. Loss on derivative contracts for the three months ended June 30, 2025 was comprised of unrealized and realized loss of $2.1 million and $10.7 million, respectively, compared to $12.6 million and $nil million, respectively, for the three months ended June 30, 2024. The Company delivered 11,939 gold ounces into the derivative contracts for the three-month period ended June 30, 2025. The Company did not deliver gold ounces into the derivative contracts for the three-month period ended June 30, 2024 (see Note 14 - Derivative and Hedging Activities).

Unrealized gain on marketable securities. For the three months ended June 30, 2025, the unrealized gain on marketable securities was $6.4 million and related to valuation of the Company's investment in Onyx. This investment was not hold for the three months ended June 30, 2024.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Claim Rentals Expense. Claim rental expense primarily consists of State of Alaska rental payments and costs incurred to record annual labor documents. For the six months ended June 30, 2025 and 2024, claim rental expense were $0.2 million and $0.3 million, respectively.

Exploration Expense. Exploration expense for the six months ended June 30, 2025 was $1.5 million compared to $0.1 million for the six months ended June 30, 2024. Current period exploration expense primarily relates to the permitting process for the underground exploration drift and baseline environmental work at the Johnson Tract Project, which are part of the IA. The prior period exploration expense relates to care and maintenance work performed on the Lucky Shot Property.

General and Administrative Expense. General and administrative expense for the six months ended June 30, 2025 and 2024 was $5.6 million and $4.7 million, respectively. The Company’s general and administrative expense primarily relates to professional fees, regulatory fees, payroll and stock-based compensation expense. The increase is mainly driven by expenditures carried for marketing and investor relations, increased legal costs and professional fees associated with regulatory filings and the Facility restructure.

Income / Loss from Equity Investment in the Peak Gold JV. The income from the Company’s equity investment in the Peak Gold JV for the six months ended June 30, 2025 was $49.6 million compared to a loss of $0.8 million for the six months ended June 30, 2024. The Manh Choh Project commenced production in July 2024, which generated income for the second half of 2024 and the first half of 2025. As of June 30, 2025, accounts payable includes $1.7 million owed to Peak Gold JV.

Interest Expense. For the six months ended June 30, 2025, interest expense was $4.8 million and primarily related to the Debenture and interest expense related to the Company’s cumulative $30.1 million net draw-down on the Facility. Prior year interest expense of $5.0 million included interest expense related to the Debenture and interest expense related to the Company's cumulative $60.0 million net draw-down on the Facility (see Note 13 - Debt).

Metal Sales. For the six months ended June 30, 2025, the gain on metal sales was $2.1 million and related to excess ounces that were purchased from the Peak Gold JV that were not delivered into the hedges and sold to the derivative counterparties and hedged volumes sold at spot with obligation to repurchase at fixed price before delivering into hedges. There were no metal sales for the six months ended June 30, 2024.

Loss on Derivative Contracts. Loss on derivative contracts for the six months ended June 30, 2025 was comprised of unrealized and realized loss of $42.6 million and $10.7 million, respectively, compared to $28.2 million and $nil million, respectively, for the six months ended June 30, 2024. The Company delivered 11,939 gold ounces into the derivative contracts for the six-month period ended June 30, 2025. The Company did not deliver gold ounces into the derivative contracts for the six-month period ended June 30, 2024 (see Note 14 - Derivative and Hedging Activities).

Unrealized gain on marketable securities. For the six months ended June 30, 2025, the unrealized gain on marketable securities was $6.7 million and related to valuation of the Company's investment in Onyx. This investment was not hold for the six months ended June 30, 2024.

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 and (ii) AISC on a By-product Basis for the Peak Gold JV operations (Manh Choh) for the three and six months ended June 30, 2025. No comparable period is provided as sales of gold at Manh Choh commenced in July 2024.

Cash Cost on a By-product Basis, per Ounce and AISC on a By-product Basis, per Ounce 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 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 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 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 and AISC on a By-product Basis, per Ounce 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.

Cash Costs on a By-product Basis, per Ounce and AISC on a By-product Basis, per Ounce are calculated by adjusting production cost of sales, as reported on the interim condensed consolidated statements of operations, as follows:

Liquidity and Capital Resources

As of June 30, 2025, the Company had approximately $36.5 million of cash.

The Company’s primary cash requirements have been for general and administrative expenses, capital calls from the Peak Gold JV for the Manh Choh Property, repayment of principal and interest related to debt and exploration expenditures on the Johnson Tract Project and Lucky Shot Property. The Company’s sources of cash have been from common stock offerings, the issuance of the Debenture, distributions from the equity investment and the proceeds from the Facility (see Note 5 - Investment in the Peak Gold JV, Note 8 - Stockholders' Equity (Deficit) and Note 13 - Debt, for a discussion of the recent activity).

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. In the third and fourth quarters of 2024, the Company received cash distributions from the Peak Gold JV relating to production at Manh Choh of $19.5 million and $21.0 million, respectively. In the first and second quarter of 2025, the Company received cash distributions totaling $24.0 million and $30.0 million, respectively. 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 $10.5 million on the Facility and delivery into its hedge contracts, for the next twelve months from the date of this report. The Company made a repayment of $7.0 million on the Facility in July 2025.

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, 2024.

Available Information

General information about the Company can be found on the Company’s website at www.contangoore.com (http://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.

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 June 30, 2025 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 last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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, 2024. 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, 2024, 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.