Contango Ore (NYSE-AM: CTGO) has secured a US$70-million loan from two banks to cover its minority share of pre-production capital spending on the Manh Choh gold project in Alaska.
Mining banks ING Capital and Macquarie arranged the loan for project owner Peak Gold Joint Venture, a 70-30 split between Kinross Gold (TSX: K; NYSE: KGC) and Contango.
"Along with our upcoming equity raise, we will fully fund our obligation to the joint venture through production," Contango's president and CEO, Rick van Nieuwenhuyse, said in a Mar. 20 news release.
The company said the project had received the federal permits needed for road construction, and early work had already started.
In Sept. 2020, Kinross acquired 70% of the Manh Choh project, formerly the Peak project, about 400 km southeast of its Fort Knox mine.
Kinross, as joint venture operator, said last year it was proceeding with the Manh Choh project. Initial production is expected to start in the second half of 2024. The project is forecast to increase Kinross' production in Alaska by about 640,000 attributable gold-equivalent oz. over the operation's life.
Manh Choh is an 8 grams gold-equivalent per tonne open-pit project. Kinross plans to process Manh Choh ore at Fort Knox using the existing mill and infrastructure.
According to Kinross, Manh Choh holds 698,000 oz. gold and 1.2 million oz. silver in proven and probable reserves as of December.
Contango's New York-quoted shares rose as much as 8.6% on Tuesday before settling 4.5% higher at US$25.17 apiece. It has a market capitalization of US$181.7 million.