Silver-Gold Miner Drills 40% Past Target in Golden Triangle

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• Contango Silver and Gold Inc. drilled 56,492 meters at Kitsault this season, about 40% more than planned and on budget, with assays due over the next two to three months.
• The 2026 drilling will feed a Kitsault resource update in the first half of 2027 and an Initial Assessment later that year. The September update lifted Indicated resources 93% to 89.55 million ounces of silver equivalent.
• Johnson Tract infrastructure was finished ahead of schedule and under budget, and the savings let the company build a camp pad that had been planned for 2027.
• Drilling from Lucky Shot's 2070E drift is the first modern test of the vein system's eastern extent, and a second rig starts on November 15.
• The company believes British Columbia's new majority Conservative government, which has signaled support for faster resource development, will help keep Kitsault on its timeline.
• Contango expects to land at the low end of its 2026 Manh Choh production guidance after rain cut a processing campaign short. Third-quarter results are due in mid-November.
• With its hedges removed, the company says it has a clean balance sheet and full exposure to the gold price.

Contango Silver and Gold Inc. (CTGO:TSX; CTGO:NYSEAMERICAN) drilled 56,492 meters in 152 holes at its Kitsault Valley Project in British Columbia's Golden Triangle this season, about 40% more than the 40,000 meters it originally planned, according to an October 28 release.

The company said it drilled the extra meters on budget. Better rig productivity lowered the cost per meter, and there were fewer weather and mobilization delays. The program wrapped up on October 15 after drilling from 61 pads. It was designed to expand known high-grade zones, use infill drilling to convert parts of the resource to higher-confidence categories, and test new targets found in 2025. Assays are pending, and the company plans to release them over the next two to three months.

CEO Rick Van Nieuwenhuyse said the company entered the year focused on getting things done in the field. "At the beginning of the year, I said it was all about execution, and this season demonstrated what disciplined execution can deliver," he said.

Contango also got ahead of schedule at its Johnson Tract Project, about 125 miles southwest of Anchorage, Alaska. Crews built a 2.6-mile access road connecting the existing camp to the proposed portal site and finished the portal laydown area, both ahead of schedule and under budget. The work sets up access for an underground exploration drift scheduled to start in 2027. Budget savings also let the company build a new camp pad that had been planned for 2027. Contango has selected an engineering consultant for a planned 60-person, fully winterized camp, targeted for 2027, that will allow year-round work as the project moves toward feasibility-level studies. Environmental studies continued through the season to support permitting.

At Lucky Shot, about 75 miles north of Anchorage, drilling began on October 22 from the 2070E drift. It is the first modern program to test the eastern extent of the Lucky Shot vein system, with 42 holes totaling 3,650 meters planned from six drill stations. A second rig is set to start drilling from the 2300E drift on November 15, with another 42 holes and 5,320 meters planned from six stations. Both rigs will drill through the end of 2026, and the company expects to finish in early 2027.

Contango also finished about 5,800 meters in 27 holes in its Coleman surface program at Lucky Shot. It completed 943 meters in 16 underground holes, testing the KM vein from the West Drift Extension. Assays from both programs are expected in Q4.

President Shawn Khunkhun credited the field teams and contractors. "Getting more done for the same budget across three projects, while bringing forward infrastructure at Johnson Tract and opening up the east side of the Lucky Shot vein system for the first time in the modern era, reflects the quality of our people and our commitment to operational excellence," he said.

The company welcomed the results of British Columbia's October 24 election, in which the Conservatives appear to have won a majority government, which the company called the first in nearly a century. Elections BC's preliminary count shows the party leading in 63 of 93 ridings, enough for a majority, though results won't be final until the official count scheduled for November 6 to 10, according to Elections BC. The company said the Conservatives have signaled support for faster responsible resource development and less regulatory red tape, and it believes that will help keep Kitsault on its previously outlined timeline.

National Bank Financial initiated coverage on October 8 with an "Outperform" rating.

Kitsault's resource grew sharply in the company's September 22 update. Indicated resources rose 93% to 89.55 million ounces of silver equivalent (AgEq), or 7.66 million tonnes at 363 grams per tonne (g/t) AgEq. Inferred resources stand at 64.92 million ounces AgEq, or 6.31 million tonnes at 320 g/t AgEq. None of the 2026 drilling is in that estimate. Contango plans to fold it into another resource update in the first half of 2027, followed by an Initial Assessment later in 2027.

Contango's production comes from its 30% interest in the Peak Gold joint venture, which includes the Manh Choh mine. A subsidiary of Kinross Gold Corp. (K:TSX; KGC:NYSE) owns the other 70% and operates the venture. The third 2026 processing campaign for Manh Choh ore ran from August 20 to September 24 and ended early because of persistent rain. Mill changes made to handle higher copper and sulfide content also increased reagent use. The remaining tons move to a fourth campaign starting in November. The company expects Q3 unit cash costs to be similar to Q2 and is guiding to the low end of its 2026 production guidance, about 40,000 gold-equivalent ounces attributable to its 30% share. Q3 results are due in mid-November.

Khunkhun said the company has also cleaned up its balance sheet. "With our hedges now removed, we have a clean balance sheet and full exposure to the gold price," he said.

Freedom Broker analyst Vitaly Kononov kept his "Buy" rating and raised his target to US$32 from US$30 on October 22, according to TipRanks. In a third-quarter preview for gold producers, he said he expects operating results across the group to diverge more sharply.

National Bank Financial initiated coverage on October 8 with an "Outperform" rating, according to MarketBeat.

Chris Temple of The National Investor wrote in his September 27 newsletter that Contango "is one of the most robust economic stories in precious metals anywhere," calling Manh Choh "one of the highest-grade open-pit gold mines in the world."

On September 25, Maxim Group analyst Tate Sullivan reiterated a "Buy" rating and raised his target to US$35 from US$28, according to TipRanks.

Cantor Fitzgerald analyst Mike Kozak maintained a "Speculative Buy" rating and US$32 price target on Contango in an August 14 report, with the stock at US$19.48. He called the second-quarter results mixed. Higher production and derivative gains helped, but costs stayed high as Manh Choh processed lower-grade ore during its transition to the South Pit.

Gold and silver are pulling back after a hawkish Federal Reserve hold, but some major forecasters see the correction as a buying window. Spot gold traded near US$4,024 an ounce on October 29 and silver near US$52.41, according to USAGold. Both are well below the record above US$5,500 that gold set in January. The Fed left rates at 3.75% to 4.00% on October 28, though two officials voted for a hike, Kitco reported.

State Street Investment Management still sees a path back to US$5,000 and beyond, Kitco reported on October 27. Head of Gold Strategy Aakash Doshi's team said prices could recover to US$5,500 by early next year, with structural demand still supporting the market. The firm puts only a 35% chance on its bear case, in which gold trades between US$4,000 and US$4,750 over the next six to nine months.

Goldman Sachs reiterated its US$5,400 target for the end of 2027 in late September, according to InvestingLive, saying rate hikes should slow the rally rather than derail it. The bank pointed to the central bank buying of about 90 tonnes a month, compared with a pre-2022 average of 17 tonnes. 

Silver's fundamentals remain tight. The Silver Institute expects the market's structural deficit to widen to 46.3 million ounces in 2026, with coin and bar demand forecast to rise 18%, according to its World Silver Survey 2026.

What did the 2026 Kitsault drilling achieve?

Contango drilled 56,492 meters in 152 holes from 61 pads, about 40% more than the 40,000 meters planned, and stayed on budget. Assays are pending and expected over the next two to three months.

How big is the Kitsault resource?

The September 22 update put Indicated resources at 89.55 million ounces of silver equivalent, up 93%, and Inferred resources at 64.92 million ounces. None of the 2026 drilling is in that estimate.

How does the new BC government affect Kitsault?

The company believes the new Conservative majority's support for faster responsible resource development and less red tape will help keep Kitsault on its previously outlined timeline.

What's happening at Johnson Tract and Lucky Shot?

At Johnson Tract, the company finished an access road, the portal laydown area, and a camp pad ahead of schedule, setting up an underground exploration drift in 2027. At Lucky Shot, two rigs will test the eastern extent of the vein system, with drilling expected to finish in early 2027.

How is Manh Choh production tracking?

Contango expects to come in at the low end of its 2026 guidance. Persistent rain ended the third processing campaign early, and the remaining tons moved to a fourth campaign starting in November.

What are the next catalysts?

They are Kitsault assays over the next two to three months, Lucky Shot's Coleman and KM vein assays in Q4, and third-quarter results in mid-November. After that comes a Kitsault resource update in the first half of 2027 and an Initial Assessment later in 2027.