Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the accompanying notes and other information included in our Form 10-K for the year ended December 31, 2025, previously filed with the SEC.

Cautionary Statement about Forward-Looking Statements

Some of the statements made in this report may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words and phrases "should be", "will be", "believe", "expect", "anticipate", "estimate", "forecast", "goal" and similar expressions identify forward-looking statements and express our expectations about future events. Any statement that is not historical fact is a forward -looking statement. These include such matters as:

Although the Company believes the expectations reflected in such forward-looking statements are reasonable, such expectations may not occur. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, that may cause our actual results, performance or achievements to be materially different from future results expressed or implied by the forward-looking statements. In addition to the risk factors described in Part II, Item 1A. Risk Factors, of this Form 10-Q and Part I, Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2025, these factors include among others:

You should not unduly rely on these forward-looking statements in this report, as they speak only as of the date of this report. Except as required by law, the Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events. All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

2026 Highlights and Recent Developments

Dolly Varden Merger

On December 7, 2025, Contango and Dolly Varden entered into the Arrangement Agreement, which was subsequently amended on February 11, 2026. Pursuant to the Arrangement Agreement, Contango agreed to acquire all of the issued and outstanding common shares of Dolly Varden in exchange for Contango common shares at an Exchange Ratio of 0.1652 Contango shares for each Dolly Varden share.

Dolly Varden was amalgamated under the Business Corporations Act (British Columbia) on January 30, 2012. Dolly Varden is a mineral exploration company focused on the acquisition and exploration of mineral properties in Canada.

Dolly Varden's primary asset is its 100%-owned Kitsault Valley Project, which includes the Dolly Varden property and the Homestake Ridge property, located in the Golden Triangle of British Columbia, Canada, approximately 25 kilometers by road to tidewater. The 163-square-kilometer Kitsault Valley Project hosts high-grade silver and gold resources and includes the past-producing Dolly Varden and Torbrit silver mines.

In addition to the Kitsault Valley Project, Dolly Varden has consolidated a land package of six additional exploration properties in the same region. These properties have historically been explored for gold, copper, silver, lead and zinc. Including the Kitsault Valley Project and these additional properties, Dolly Varden holds mineral tenures totaling approximately 100,000 hectares within the region.

Immediately prior to the closing of the Arrangement, all outstanding restricted share units of Dolly Varden vested and were settled for Dolly Varden Shares. All outstanding Dolly Varden Options were exchanged for Contango stock options, adjusted to reflect the Exchange Ratio.

Eligible Canadian stockholders of Dolly Varden were entitled to elect to receive exchangeable shares in a Canadian subsidiary of Contango, which are exchangeable on a one for one basis into Contango common shares, in lieu of receiving Contango Shares directly.

On March 17, 2026, the shareholders of Dolly Varden and Contango voted to approve the acquisition, which was subsequently approved by the Supreme Court of British Columbia on March 23, 2026. The acquisition was completed on March 26, 2026, following the satisfaction of all remaining legal and regulatory requirements.

Manh Choh Project

In July 2024, the Peak Gold JV commenced processing ore at the Fort Knox facility and on July 8, 2024, the Manh Choh Project achieved a significant milestone and poured its first gold bar, on schedule. In 2024, the Company received $40.5 million in cash distributions from the Peak Gold JV relating to production at Manh Choh, followed by $102.0 million received during 2025. During the first and second quarters of 2026, the Company received $9.0 million in cash distributions from the Peak Gold JV, for each quarter, respectively, resulting in $18.0 million in total cash distributions relating to production at Manh Choh during 2026.

During the first quarter of 2026, the Peak Gold JV (on a 100% basis) processed 187,479 tons of ore with an average grade of 0.125 ounces ("oz") per ton, containing approximately 23,435 oz of gold. Gold recovery averaged 88.5%, resulting in approximately 20,600 oz of recovered gold, of which Contango's 30% share amounted to 6,187 oz of gold. During the first quarter of 2026, a total of 8,012 oz of gold and 15,042 oz of silver were delivered to Contango and sold.

During the second quarter of 2026, the Peak Gold JV (on a 100% basis) processed 253,494 tons of ore with an average grade of 0.145 ounces ("oz") per ton, containing approximately 36,760 oz of gold. Gold recovery averaged 80.4%, resulting in approximately 29,500 oz of recovered gold, of which Contango's 30% share amounted to 8,866 oz of gold. During the second quarter of 2026, a total of 8,627 oz of gold and 10,319 oz of silver were delivered to Contango and sold.

Johnson Tract Project

During the second quarter of 2026, activities at the Johnson Tract Project focused on planning, resourcing, permitting coordination, and logistical preparations in support of the Company's planned 2026 field program. On December 1, 2025, the Johnson Tract Critical Metals Project was posted to the Federal Permitting Dashboard as a covered project under Title 41 of the Fixing America's Surface Transportation Act, commonly referred to as FAST-41. The Federal Permitting Improvement Steering Council announced the project's FAST-41 coverage on December 2, 2025. The U.S. Army Corps of Engineers ("Corps") is identified as the lead federal permitting agency for the project.

During the second quarter of 2026, the Company advanced planning activities for the proposed 2026 field season, including solicitation and review of bids for road construction and helicopter support associated with planned access improvements between the Johnson Tract camp and the proposed portal site. These activities are intended to support the Company's operational timeline and continued advancement of the project through the permitting and development planning process.

Lucky Shot Property

In November 2025, the Company mobilized a drill rig at the Lucky Shot mine site to commence the first phase of a 15,000-meter underground in-fill drilling program. The Company began reporting assay results from this program during the first quarter of 2026. This drilling program, along with detailed engineering, hydrology and geotechnical studies is expected to support the preparation of a feasibility level mine and transportation plan for Lucky Shot, with an objective of targeting to produce 40,000 to 50,000 ounces of gold per year using the Direct Shipping Ore (DSO) approach, assuming positive exploration success. The Company expects to complete the feasibility study in the first half of 2027 and make a production decision in 2027.

In June 2026, the Company compiled final assay results from the initial phase of the drilling program. The final assay results include several significant gold intercepts from the Lucky Shot vein system, highlighted by 0.17 meters grading 972.10 grams per tonne ("g/t") gold ("Au") in drill hole LSU26091. The intercept encountered the L1d Vein and included visible gold observed during core logging. Underground exploration development work has re-commenced at Lucky Shot, with our contract miner, GMS Mine Repair & Maintenance, Inc. ("GMS") mobilized to site and currently advancing exploration access and future underground drill platforms.

The Lucky Shot surface drill program commenced on June 22, 2026 with the mobilization of two helicopter-supported drill rigs to site. A total of 29 holes across five drilling platforms, totaling approximately 6,800 meters are planned. The program is designed to infill areas of known mineralization within the Coleman portion of the resource, while also executing step-out drilling to test the structural continuity between the Coleman and Lucky Shot vein systems.

Kitsault Valley Project

A new mineral resource estimate ("MRE") is expected in the third quarter of 2026. A 40,000 meter surface drilling program started in June, with over 14,000 meters completed through June 30, 2026. The planned $25 million campaign aims to infill known mineral resources at Homestake, Wolf, Dolly Varden, North Star and Torbrit, while testing high-priority exploration targets across the Company's wider holdings in the southern corner of the Golden Triangle. Following the 2026 drill program, the Company is planning the formulation of a preliminary development plan in the form of an Initial Assessment ("IA") for the Kitsault Valley assets, planned for the second quarter of 2027.

Strategy and Asset Management

Partnering with strategic industry participants to expand future exploration work. As of October 1, 2020, in conjunction with the Kinross Transactions and the signing of the A&R JV LLCA, KG Mining became the manager of the Peak Gold JV (the "Manager"). KG Mining may resign as Manager and can be removed as Manager for a material breach of the A&R JV LLCA, a material failure to perform its obligations as the Manager, a failure to conduct the Peak Gold JV operations in accordance with industry standards and applicable laws, and other limited circumstances. Except as expressly delegated to the Manager, the A&R JV LLCA provides that the JV Management Committee has exclusive authority to determine all management matters related to the Company. The JV Management Committee currently consists of one appointee designated by the Company and two appointees designated by KG Mining. The Representatives designated by each member of the Peak Gold JV vote as a group, and in accordance with their respective membership interests in the Peak Gold JV. Except in the case of certain actions that require approval by unanimous vote of the Representatives, the affirmative vote of a majority of the membership interests in the Peak Gold JV constitutes the action of the JV Management Committee.

Structuring Incentives to Drive Behavior. The Company believes that equity ownership aligns the interests of the Company's executives and directors with those of its stockholders. The Company has implemented an equity compensation program for its executive officers and directors (and other persons) that provides an incentive for such officers to achieve the Company's long-term business objectives. The Company's equity compensation program includes two forms of long-term incentives: restricted stock and stock options. As of June 30, 2026, the Company's directors and executives beneficially own approximately 5.6% of the Company's common stock.

Acquiring exploration properties. The Company anticipates from time to time acquiring additional properties in Alaska for exploration, subject to the availability of funds. The acquisitions may include leases or similar rights from Alaska Native corporations and/or staking Federal or State of Alaska mining claims. Acquiring additional properties will likely result in additional expense to the Company for minimum royalties, minimum rents and annual exploratory work requirements. The Company is open to strategic partnerships or alliances with other companies as a means to enhance its ability to fund new and existing exploration and development opportunities.

Results of Operations

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Claim Rental Expense. Claim rental expense primarily consists of State of Alaska and Kitsault rental payments and costs incurred to record annual labor documents. For the three months ended June 30, 2026 and 2025, claim rental expense was $0.1 million for each period.

Exploration Expense. Exploration expense for the three months ended June 30, 2026 was $12.3 million compared to $1.0 million for the three months ended June 30, 2025. Current period exploration expense primarily relates to the advances on the 15,000 meter underground and surface drilling program on the Lucky Shot Property, 40,000 meter drilling program on the Kitsault Valley Project and permitting activities and road costs on the Johnson Tract Property. The prior period exploration expense related to the permitting process for the underground exploration drift and baseline environmental work at the Johnson Tract Project.

General and Administrative Expense. General and administrative expense for the three months ended June 30, 2026 and 2025 was $5.3 million and $3.1 million, respectively. The Company's general and administrative expense primarily relates to professional fees, regulatory fees, marketing and investor relations, payroll and stock-based compensation expense. The increase is mainly driven by the increased level of operations as a result of the merger.

Income from Equity Investment in the Peak Gold JV. The income from the Company's equity investment in the Peak Gold JV for the three months ended June 30, 2026 was $9.3 million compared to income of $27.3 million for the same period in 2025, mainly driven by a reduction in the revenue generated by the Peak Gold JV, resulting from a reduction in ounces sold during 2026 compared to 2025. During the second quarter of 2026, production at Manh Choh focused on mining and processing lower grade ore and processing less tons from the North Pit as Manh Choh transitions to the higher-grade portions of the South Pit.

Interest Expense. For the three months ended June 30, 2026, interest expense was $0.9 million and primarily related to the Queen's Road Capital Investment, Ltd. Debenture (the "Debenture") and interest on the Company's cumulative net draw-down of $12.6 million on the secured credit facility. Prior year interest expense of $2.0 million primarily related to the Debenture and interest on the Company's cumulative net draw-down of $30.1 million on the secured credit facility (see Note 13 - Debt).

Gain on Metal Sales. For the three months ended June 30, 2026 and 2025, the gain on metal sales was $0.6 million and $1.0 million, respectively. These gains primarily related to (i) excess ounces purchased from the Peak Gold JV that were not delivered into the hedges and were instead sold to the derivative counterparties, and (ii) hedged volumes sold at spot prices with an obligation to repurchase the ounces at fixed prices prior to delivery into the hedges. During the three months ended June 30, 2026, the Company sold 8,627 ounces at an average spot price of $4,328 compared to 17,522 ounces sold at an average spot price of $3,469 during the three months ended June 30, 2025.

Gain/(Loss) on Derivative Contracts. Gain/(loss) on derivative contracts for the three months ended June 30, 2026 consisted of an unrealized gain of $10.3 million and a realized gain of $0.1 million. This compares to an unrealized loss of $2.1 million and a realized loss of $10.7 million for the three months ended June 30, 2025. The period over period variance primarily reflects changes in the fair value of derivative contracts driven by increases in spot gold prices and corresponding changes in the forward curves used to value the contracts, and the completion of deliveries under the derivative arrangements.

During the three months ended June 30, 2026, the Company delivered 7,000 gold ounces into the derivative contracts including the carry trade with maturity dates of December 31, 2026. During the three months ended June 30, 2025, the Company delivered 11,939 gold ounces into the derivative contracts (see Note 14 - Derivative and Hedging Activities).

Gain/(Loss) on Marketable Securities. For the three months ended June 30, 2026, unrealized gain on marketable securities totaled $0.5 million and was primarily due to changes in the fair value of the Company's investment in Onyx, compared to an unrealized gain of $6.4 million for the three months ended June 30, 2025.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Claim Rental Expense. Claim rental expense primarily consists of State of Alaska and Kitsault rental payments and costs incurred to record annual labor documents. For the six months ended June 30, 2026 and 2025, claim rental expense was $0.3 million and $0.2 million, respectively.

Exploration Expense. Exploration expense for the six months ended June 30, 2026 was $16.1 million compared to $1.5 million for the six months ended June 30, 2025. Current period exploration expense primarily relates to the advances on the 15,000 meter underground and surface drilling program on the Lucky Shot Property, 40,000 meter drilling program on the Kitsault Valley Project and permitting activities and road costs on the Johnson Tract Property. The prior period exploration expense related to the permitting process for the underground exploration drift and baseline environmental work at the Johnson Tract Project.

General and Administrative Expense. General and administrative expense for the six months ended June 30, 2026 and 2025 was $9.1 million and $5.6 million, respectively. The Company's general and administrative expense primarily relates to professional fees, regulatory fees, marketing and investor relations, payroll and stock-based compensation expense. The increase is mainly driven by the increased level of operations as a result of the merger with Dolly Varden.

Income from Equity Investment in the Peak Gold JV. The income from the Company's equity investment in the Peak Gold JV for the six months ended June 30, 2026 was $22.0 million compared to income of $49.6 million for the same period in 2025, mainly driven by a reduction in the revenue generated by the Peak Gold JV, resulting from a reduction in ounces sold during 2026 compared to 2025. During the first half of 2026, production at Manh Choh focused on mining and processing lower grade ore and processing less tons from the North Pit as Manh Choh transitions to the higher-grade portions of the South Pit.

Interest Expense. For the six months ended June 30, 2026, interest expense was $1.9 million and primarily related to the Queen's Road Capital Investment, Ltd. Debenture (the "Debenture") and interest on the Company's cumulative net draw-down of $12.6 million on the secured credit facility. Prior year interest expense of $4.8 million primarily related to the Debenture and interest on the Company's cumulative net draw-down of $30.1 million on the secured credit facility (see Note 13 - Debt).

Gain on Metal Sales. For the six months ended June 30, 2026 and 2025, the gain on metal sales was $1.3 million and $2.1 million, respectively. These gains primarily related to (i) excess ounces purchased from the Peak Gold JV that were not delivered into the hedges and were instead sold to the derivative counterparties, and (ii) hedged volumes sold at spot prices with an obligation to repurchase the ounces at fixed prices prior to delivery into the hedges. During the six months ended June 30, 2026, the Company sold 16,641 ounces at an average spot price of $4,621 compared to 34,905 ounces sold at an average spot price of $3,133 during the six months ended June 30, 2025.

Gain/(Loss) on Derivative Contracts. The $8.7 million loss on derivative contracts for the six months ended June 30, 2026 consisted of an unrealized gain of $42.2 million and a realized loss of $50.9 million. This compares to a $53.3 million loss on derivative contracts consisting of an unrealized loss of $42.6 million and a realized loss of $10.7 million for the six months ended June 30, 2025. The period over period variance primarily reflects changes in the fair value of derivative contracts driven by increases in spot gold prices and corresponding changes in the forward curves used to value the contracts, the completion of deliveries under the derivative arrangements, and the settlement of 15,446 oz of gold hedges and the purchase of puts covering 15,446 oz during the period.

During the six months ended June 30, 2026, the Company delivered 12,554 gold ounces into the derivative contracts including the carry trade with maturity dates of March 31, 2026, September 30, 2026 and December 31, 2026. During the six months ended June 30, 2025, the Company delivered 11,939 gold ounces into the derivative contracts (see Note 14 - Derivative and Hedging Activities).

Gain/(Loss) on Marketable Securities. For the six months ended June 30, 2026, unrealized loss on marketable securities totaled $0.2 million and was primarily due to changes in the fair value of the Company's investment in Onyx, compared to an unrealized gain of $6.7 million for the six months ended June 30, 2025.

Cash Cost on a By-Product Basis and All-In Sustaining Costs on a By-Product Basis (non-GAAP)

The table below presents reconciliations between the most comparable GAAP measure of total cost of sales to the non-GAAP measures of (i) Cash Cost on a By-product Basis, per ounce sold and (ii) All-in Sustaining Costs ("AISC") on a By-product Basis, per ounce sold for the Peak Gold JV operations (Manh Choh) for the three and six months ended June 30, 2026 and 2025.

Cash Cost on a By-product Basis, per Ounce sold and AISC on a By-product Basis, per Ounce sold are measures developed by precious metals companies (including the Silver Institute and the World Gold Council) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that these non-GAAP measures as we report them are the same as those reported by other mining companies.

Cash Cost on a By-product Basis includes all direct and indirect operating cash costs related directly to the physical activities of producing gold, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes. The value of silver sold is deducted from the total production cost of sales as it is considered residual production, i.e. a by‐product.

AISC on a By-product Basis includes reclamation, sustaining capital, exploration and joint venture partner operator management costs.

Cash Cost on a By-product Basis, per Ounce sold is an important operating statistic that we utilize to measure a mine's operating performance. We use AISC on a By-product Basis, per Ounce sold as a measure of a mine's net cash flow after costs for reclamation and sustaining capital. This is similar to the Cash Cost on a By-product Basis, per Ounce sold measure we report, but also includes reclamation and sustaining capital costs. Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain gold production. Cash Cost on a By-product Basis, per Ounce sold and AISC on a By-product Basis, per Ounce sold also allow us to benchmark the performance of the Peak Gold JV versus those of our competitors. These statistics are useful in identifying acquisition and investment opportunities as they provide a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics.

During the six months ended June 30, 2026, production at Manh Choh focused on mining and processing lower grade ore and processing less tons from the North Pit, as the Peak Gold JV transitions to the higher-grade portions of the South Pit, with increased ore tons processed and ore grade processed for the remainder of the year. The Peak Gold JV remains on track to meet our guidance of 40,000 to 45,000 ounces of gold production, with cash costs between $1,900 to $2,000 per ounce of gold sold and AISC of $2,200 to $2,300 per ounce of gold sold.

Cash Costs on a By-product Basis, per Ounce sold and AISC on a By-product Basis, per Ounce sold are calculated by adjusting production cost of sales, as reported on the interim condensed consolidated statements of operations, as follows:

Liquidity and Capital Resources

As of June 30, 2026, the Company had approximately $89.0 million of cash and cash equivalents.

The Company's primary cash requirements have been for general and administrative expenses, capital calls from the Peak Gold JV for the Manh Choh Property, repayment of principal and interest related to debt and exploration expenditures on the Johnson Tract Project and Lucky Shot Property. The Company's sources of cash have been from common stock offerings, the issuance of the Debenture, distributions from the equity investment, the proceeds from the Facility (see Note 5 - Investment in the Peak Gold JV, Note 8 - Stockholders' Equity and Note 13 - Debt, for a discussion of the recent activity), and the acquisition of Dolly Varden (see Note 16 - Acquisition).

The Manh Choh Project began production early in the third quarter of 2024 and on July 8, 2024, the Peak Gold JV poured its first gold bar. The Manh Choh Project remains on schedule and ore mining continues along with stockpiling of ore at the Fort Knox facility. Production from the Manh Choh Project has allowed the Peak Gold JV to operate from the cash flows generated from its operations and there are no future anticipated cash calls.

The Company's cash needs going forward will primarily relate to exploration of the Contango Properties, repayment of debt and related interest and general and administrative expenses of the Company. During the first and second quarter of 2026, the Company received cash distributions totaling $9.0 million and $9.0 million, respectively. Although there can be no guarantee that the Peak Gold JV will continue to make distributions to the Company, the Company believes that distributions are probable and that it will maintain sufficient liquidity to meet its working capital requirements, including repayment obligations of approximately $46.3 million on the Facility (see update at Note 20 - Subsequent Events), for the next twelve months from the date of this report.

On February 12, 2026, the Company sold shares of common stock and pre-funded warrants and received gross proceeds of $50 million. The Company used the net proceeds of approximately $47.0 million to settle gold hedge contracts and purchase put options. Any remaining proceeds will be used for general corporate purposes, including working capital.

Beyond the next twelve months, the Company's material cash requirements include (i) the repayment at maturity of the $20.0 million unsecured convertible debenture held by Queen's Road Capital Investment, Ltd., which matures on May 26, 2028 (see Note 13 - Debt), and (ii) principal repayments totaling $10.0 million under the secured promissory note entered into in connection with the Lucky Shot Property acquisition, with $2.0 million due on each of the second and third anniversaries of the July 1, 2026 closing date and the remaining principal balance due on the fourth anniversary (see Note 20 - Subsequent Events). The Company expects to fund these longer-term obligations through a combination of anticipated cash distributions from the Peak Gold JV, proceeds from metal sales, potential future equity issuances (including amounts available under its ATM program), and available cash on hand. The Company may also consider refinancing alternatives or other capital markets transactions as they become available on commercially acceptable terms.

Further financing by the Company may include issuances of equity, instruments convertible into equity (such as warrants) or various forms of debt. The Company has issued common stock and other instruments convertible into equity in the past and cannot predict the size or price of any future issuances of common stock or other instruments convertible into equity, and the effect, if any, that such future issuances and sales will have on the market price of the Company's securities.

Off-Balance Sheet Arrangements

None.

Critical Accounting Estimates

The discussion and analysis of the Company's financial condition and results of operations is based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. There were no material changes in the Company's critical accounting estimates from those that were previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 other than the accounting policy described in Note 4 - Summary of Significant Accounting Policies.

Available Information

General information about the Company can be found on the Company's website at www.contangoore.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website as soon as reasonably practicable after the Company files or furnishes them to the SEC.