Contango Converts 15,000-Ounce Hedge into $33M Debt and Cuts Rate to 7.4%
CTGO•Contango Silver & Gold converted 15,000 hedged gold ounces at $1,935 into $33 million of debt, raised principal to $46.3 million and cut interest to 7.4%. This transaction removes cash-flow limits, adds $715,000 of $3,100 puts, and delivers unhedged gold exposure before anticipated 2027 production.
1. Credit Facility Amendment
Contango amended its credit facility, reducing the interest rate from approximately 8.9% to 7.4% with no restructuring fee. The total principal obligation increased from $12.6 million to $46.3 million, reflecting the converted hedge and additional put contract financing.
2. Hedge Conversion Details
The company converted the remaining 15,000 ounces of hedged gold at an average strike price of $1,935 into $33 million of debt. To offset potential downside, Contango paid $715,000 for 15,000 put contracts at a $3,100 strike, which were added to the debt balance.
3. Financial and Operational Outlook
By eliminating hedges, Contango removes cash-flow ceilings and offers full unhedged exposure to rising gold prices. Principal repayments are scheduled quarterly through mid-2027, and the Manh Choh mine’s transition to the South Pit sets the stage for higher-grade, record production in 2027, with flexibility to repay debt early.
