CTGO: Closed my position

Contango Ore is a company that should be releasing news but isn’t.  The reason to own it is if you think that it has a promising deposit that has very good chances of turning into a mine.  In that scenario, the logical next steps for CORE are:

  1. Complete a resource estimate and then a pre-feasibility study.
  2. Start hiring people with mine engineering experience.
  3. Start working on financing.  The company could bring in a partner that brings mining experience and some financing, e.g. seniors like Goldcorp, Agnico Eagle, Teck, etc.
  4. Perform additional drilling and/or announce plans for the next exploration season.

The lack of news makes me very antsy.  Something may not be right, e.g. the company has had difficulty selling the deposit or raising capital because the deposit is a dud.

Is Brad Juneau a good CEO for Contango Ore?

While I’m a fan of Brad Juneau, I don’t think that he is a good CEO.  He clearly does not have CEO aspirations because he didn’t want to be the CEO of Contango Oil and Gas (MCF).

At CORE, Juneau decided to hire Petrie Partners to help the company explore “strategic alternatives” half a year ago.  This is a strange choice as Petrie Partners advertises itself as a “boutique investment banking firm offering financial advisory services to the oil and gas industry“.  Contango Ore is a mining company, not an oil and gas company.  Secondly, I’m not a fan of investment bankers as I feel that their services are generally overpriced.

The bottom line

It was an easy decision for me to sell at a profit.


My original thesis on the company.

7 thoughts on “CTGO: Closed my position

  1. Interesting rationale and conclusion. Juneau has specifically said they want to sell; arranging financing/joint ventures would be a distant second choice. So there isn’t a justification to hire folks at this point.

    They have composed their initial resource estimate. They have hired a financial adviser. They have been shopping the company for six months–no deal yet. Six months doesn’t seem inordinately long to conduct a sale process, given the due diligence required and multiple bidding rounds.

    My big worry is that Juneau et al. have an strong interest to sell the deposit at a modest price, since they will likely retain their royalty interest in the property. That seems to be the most attractive financial slice of the asset, but you need someone to build the mine first. Cut prospective buyers a deal today, so that the royalty pays out.

  2. I think the assumption (besides speculation) is since Royal Gold keeps investing, they must have a positive view and have the experience to know what is a viable prospect. They have stopped reporting silver and copper content I assume because Royal Gold is just interested in knowing if the skarn deposit is viable prospect for gold only. Skarn deposits usually don’t pan out in Alaska.

    There really isn’t much room for much growth at $24 and very high risk so am currently standing on the sidelines. Sold at $20.

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