Contango Ore, Inc. (CTGO): A Bull Case Theory

We came across a bullish thesis on Contango Ore, Inc. (CTGO) on Substack by Junior Resource Investing. In this article, we will summarize the bulls’ thesis on CTGO. Contango Ore, Inc. (CTGO)’s share was trading at $11.42 as of April 11^th. CTGO’s trailing and forward P/E were 4.97 and 10.17 respectively according to Yahoo Finance.

Aerial view of a miner hard at work in the silver and gold mine.

Contango Ore (CTGO) represents a unique and undervalued opportunity in the gold mining sector, thanks to its innovative “direct shipping ore” (DSO) model. This approach bypasses traditional processing by leveraging a toll-milling hub-and-spoke strategy that allows Contango to bring small, high-grade deposits into production rapidly and cost-effectively. Already producing gold at its Manh Choh project, Contango forecasts 60,000 ounces of high-grade gold in 2025, up from 43,000 ounces in its first production year. With gold near $2,800 per ounce, this translates into approximately $40 million in revenue, with around $20 million in free cash flow after debt servicing—despite short-term issues such as trucking constraints from bridge restrictions and moisture challenges, which are being actively addressed.

Contango’s current operational hiccups have created what the market has misread as structural issues. Yet, the bridge problem is on its way to resolution via a federal-state infrastructure agreement, and moisture-related inefficiencies are being countered through simple mitigation strategies. Other constraints, such as hedging at $2,025 and debt servicing requirements, are temporary, with both set to roll off by the second half of 2027. This timing sets up Contango for a clean, organic tripling of after-debt cash flow—jumping from $20 million to $60 million annually—simply by doing what it’s already doing: producing and selling gold.

Importantly, Manh Choh is only the first spoke in Contango’s DSO network. Additional projects, notably Lucky Shot and Johnson Tract, offer potential to double or triple production capacity over the next 3–5 years, with 100,000–200,000 ounces of annual gold equivalent production seen as realistic. These projects, while requiring capital and effort, benefit from Contango’s growing financial strength, disciplined execution, and the increasing durability that comes with scale. Despite a beaten-up stock chart due to near-term challenges, the company remains well-managed, revenue-positive, and fundamentally intact. With only ~13 million fully diluted shares and a market cap near $110 million, the disconnect between current valuation and forward cash flow potential is striking.