Shares of gold exploration and mining company Contango ORE surged nearly 6% on Friday, June 28, following the announcement that the majority of shareholders of Canadian gold miner HighGold Mining approved a deal allowing Contango to acquire it.
Details
On June 28, Contango’s share price on the Nasdaq exchange rose nearly 6% to $18.07 before dropping 3% in after-hours trading. Over the past 12 months, the shares are down more than 26%.
On Friday, the company announced that HighGold Mining’s board of directors had approved the sale. HighGold, which owns the Johnson Tract gold project in Alaska, will triple Contango’s current resources, according to Contango CEO and President Rick Van Nieuwenhuyse. Currently, Contango has two mines in Alaska: Lucky Shot and Manh Choh (the latter is co-owned with Kinross Gold).
Context
Contango announced the deal for HighGold on May 2, and the parties expect the Supreme Court of British Columbia to approve it on July 2. Under the terms, Contango shareholders will own approximately 85% of the combined company, while HighGold shareholders will get about 15%. The deal is expected to close on July 9.
“It is a true win-win for all,” Van Nieuwenhuyse said in May. From the second half of 2024, the Manh Choh mine is expected to begin generating cash flow, which can be directed toward developing the Johnson Tract project. The first gold is scheduled to be poured at the Manh Choh mine on July 8. Exploration drilling at Johnson Tract is planned for this summer, at a cost of $3 million.
Analyst insights
According to MarketWatch, five analysts are covering the company, and all have a buy recommendation for its shares. The average target price is $33 per share, indicating upside of more than 84%.
