What changed in this filing

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Item 1. Financial Statements

2021-02-11 compared with 2020-11-13 · 173 added, 160 removed, 355 unchanged (48% of the section changed)

Item 1 - Financial Statements

September 30, 2020

December 31, 2020

June 30, 2020

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Common Stock, $0.01 par value, 45,000,000 shares authorized;

5,994,667 shares issued and outstanding at September 30, 2020;

6,200,500 shares issued and outstanding at December 31, 2020;

6,590,113 shares issued and 6,557,239 outstanding at June 30, 2020

Additional paid-in capital

Treasury stock at cost (0 shares at September 30, 2020;

Treasury stock at cost (0 shares at December 31, 2020;

and 32,874 at June 30, 2020)

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Three Months Ended December 31,

Six Months Ended December 31,

Exploration expense

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INCOME/(LOSS) BEFORE TAXES

Income tax expense

Income tax (expense)/benefit

NET INCOME/(LOSS)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended September 30,

Six Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Decrease/(increase) in prepaid expenses and other

Increase/(decrease) in accounts payable and accrued liabilities

Decrease in accounts payable and accrued liabilities

Increase in income taxes payable

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Balance at September 30, 2020

Stock-based compensation

Restricted stock activity

Net income for the period

Balance at December 31, 2020

Shareholders ’

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Balance at September 30, 2019

Stock-based compensation

Restricted stock activity

Net loss for the period

Balance at December 31, 2019

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Contango ORE, Inc.

(“CORE” or the “Company”) engages in exploration for gold ore and associated minerals in Alaska through a 30.0% membership interest in Peak Gold, LLC (the “Joint Venture Company”), which leases approximately 675,000 acres for exploration and development and through its wholly-owned subsidiary, Contango Minerals Alaska, LLC (“Contango Minerals”), which separately leases approximately 168,000 acres for exploration.

(“CORE” or the “Company”) engages in exploration for gold, silver and copper ores in Alaska.

The Company has a 30.0% membership interest in Peak Gold, LLC (the “Joint Venture Company”), which leases approximately 675,000 acres from the Tetlin Tribal Council (the "Tetlin Lease") for exploration and development through its wholly-owned subsidiary, CORE Alaska, LLC (“CORE Alaska”).

The Company's wholly-owned subsidiary, Contango Minerals, LLC (“Contango Minerals”) also owns 100% interest in the mineral rights to approximately 167,000 acres of State of Alaska mining claims located north and northwest of the Tetlin Lease.

The Company is in an exploration stage.

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The proceeds from the investments were used for exploration of the Peak Gold Joint Venture Property.

Royal Gold served as the manager of the Joint Venture Company and managed, directed, and controlled operations of the Joint Venture Company until the Kinross Transactions.

On September 29, 2020, the Company, CORE Alaska, LLC and KG Mining (Alaska), Inc., a Delaware corporation (formerly known as Skip Sub, Inc.) (“KG Mining”) and an indirect wholly-owned subsidiary of Kinross Gold Corporation, a corporation formed under the laws of Ontario, Canada (“Kinross”), entered into a Purchase Agreement (the “CORE Purchase Agreement”), pursuant to which CORE Alaska sold a 30.0% membership interest (the “CORE JV Interest”) in the Joint Venture Company, to KG Mining (the “CORE Transactions”).

Kinross is a large gold producer with a diverse global portfolio and extensive operating experience in Alaska.

Royal Gold served as the manager of the Joint Venture Company and managed, directed, and controlled operations of the Joint Venture Company until the Kinross Transactions (described below).

On September 29, 2020, the Company, CORE Alaska, LLC and KG Mining (Alaska), Inc.

(“KG Mining”), an indirect wholly-owned subsidiary of Kinross Gold Corporation, a corporation formed under the laws of Ontario, Canada (“Kinross”), entered into a Purchase Agreement (the “CORE Purchase Agreement”), pursuant to which CORE Alaska sold a 30.0% membership interest (the “CORE JV Interest”) in the Joint Venture Company, to KG Mining (the “CORE Transactions”).

Kinross is a large gold producer with a diverse global portfolio, and has extensive operating experience in Alaska.

The CORE Transactions closed on September 30, 2020.

In consideration for the CORE JV Interest, the Company received $32.4 million in cash and 809,744 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”).

The 809,744 shares of Common Stock were acquired by KG Mining from Royal Gold, as part of the Royal Gold Transactions (discussed below) and were subsequently canceled by the Company.

The 809,744 shares of Common Stock were acquired by KG Mining from Royal Gold, as part of the Royal Gold Transactions (described below) and were subsequently canceled by the Company.

Of the $32.4 million cash consideration, $1.2 million constituted a reimbursement prepayment to the Company by KG Mining of amounts relating to CORE Alaska’s proportionate share of certain silver royalty payments that the Joint Venture Company may be obligated to pay to Royal Gold, with the understanding that as a result of such reimbursements, KG Mining would bear the entire economic impact of those silver royalty payments due from the Joint Venture Company.

Concurrently with the closing of the CORE Transactions, KG Mining, in a separate transaction, acquired from Royal Gold (i) 100% of the equity of Royal Alaska, LLC (“Royal Alaska”), which held a 40.0% membership interest in the Joint Venture Company and (ii) 809,744 shares of Common Stock held by Royal Gold (the “Royal Gold Transactions” and, together with the CORE Transactions, the “Kinross Transactions”).

After the consummation of the Kinross Transactions, CORE Alaska retained a 30.0% membership interest in the Joint Venture Company.

KG Mining now holds a 70.0% membership interest in the Joint Venture Company and serves as the manager and operator of the Joint Venture Company.

KG Mining and CORE Alaska entered into the Amended and Restated Limited Liability Company Agreement of the Joint Venture Company (the “A&R JV LLCA”) on October 1, 2020 to address the new ownership arrangements and to incorporate additional terms that will permit the Joint Venture Company to further develop and produce from its properties (see Note 13 - Subsequent Events).

After the consummation of the Kinross Transactions, CORE Alaska retained a 30.0% membership interest in the Joint Venture Company, and KG Mining obtained a 70.0% membership interest in the Joint Venture Company (though the joint venture partners changed after the consummation of the Kinross Transactions, the legal entity remains Peak Gold, LLC, thus it will continue to be referred to as the “Joint Venture Company” throughout the document).

KG Mining serves as the manager and operator of the Joint Venture Company.

Prior to the Kinross Transactions, the Joint Venture Company, the Company, Contango Minerals, CORE Alaska, Royal Gold and Royal Alaska entered into a Separation and Distribution Agreement, dated as of September 29, 2020 (the “Separation Agreement”).

Pursuant to the Separation Agreement, the Joint Venture Company completed the formation of Contango Minerals and contributed approximately 168,000 acres of Alaska State mining claims to it, subject to the Option Agreement (defined below) and a 1.0% net smelter returns royalty interest on certain of the contributed Alaska state mining claims.

Pursuant to the Separation Agreement, the Joint Venture Company completed the formation of Contango Minerals and contributed approximately 167,000 acres of Alaska State mining claims to it, subject to the Option Agreement (described below) and a 1.0% net smelter returns royalty interest on certain of the contributed Alaska state mining claims.

After the formation and contribution to Contango Minerals, the Joint Venture Company made simultaneous distributions to Royal Alaska and CORE Alaska by (i) granting to Royal Gold a new 28.0% net smelter returns silver royalty on all silver produced from a defined area within the Tetlin Lease and also transferring the additional 1.0% net smelter returns royalty on the contributed Alaska state mining claims to Royal Gold and (ii) assigning 100% of the membership interests in Contango Minerals to CORE Alaska, which were in turn distributed to the Company, resulting in Contango Minerals becoming a wholly-owned subsidiary of the Company.

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Subject to the conditions in the Option Agreement, the Joint Venture Company may exercise the option to purchase the Alaska state mining claims, in whole or in part, at an exercise price of $50,000.

The Joint Venture Company’s option to purchase the Alaska state mining claims from the Company expires and is of no further force and effect upon the earlier of (i) 18 months after the date of the Option Agreement, or (ii) the termination of the Option Agreement pursuant to its terms.

The Joint Venture Company’s option to purchase the Alaska state mining claims from the Contango Minerals expires and is of no further force and effect upon the earlier of (i) 18 months after the date of the Option Agreement, or (ii) the termination of the Option Agreement pursuant to its terms.

The Option Agreement may be terminated (a) by the Joint Venture Company at any time upon written notice to Contango Minerals, (b) if the Joint Venture Company fails to timely pay or reimburse Contango Minerals for certain fees, including taxes and certain other fees necessary to maintain the Alaska state mining claims in good standing under applicable laws, or (c) in the event the Alaska state mining claims are subject to a condemnation under eminent domain.

As of December 31, 2020, the Joint Venture Company had reimbursed Contango Minerals for the cost of the annual rentals associated with option claims.

The Company has been involved in the exploration on the Peak Gold Joint Venture Property for ten years, which has resulted in identifying two mineral deposits (Peak and North Peak) and several other gold, silver, and copper prospects.

The Joint Venture Company plans to mine ore from the Peak and North Peak deposits and then process the ore at the existing Fort Knox mining and milling complex located approximately 250 miles away.

The use of the Fort Knox mill is expected to accelerate the development of the Peak Gold Joint Venture Property and result in significantly reduced upfront capital development costs, smaller environmental footprint, a shorter permitting and development timeline and less overall risk for the Peak Gold Joint Venture Property.

In December 2019, a novel strain of coronavirus (“COVID-19”) surfaced.

Through September 30, 2020, the spread of this virus and government responses have caused business disruption and is adversely affecting many industries.

The Company and the Joint Venture Company are continuing to monitor the situation and taking reasonable steps to keep their respective business premises, properties, vendors and employees in a safe environment and are constantly monitoring the impact of COVID-19.

Due to the effects of COVID-19 and for the safety of the Joint Venture Company’s field personnel and the surrounding community, the Management Committee of the Joint Venture Company temporarily postponed new exploration.

As of September 30, 2020, the Company had funded a total of $1.3 million to the Joint Venture Company for its portion of the calendar year 2020 budget, which was used primarily for the care and maintenance of the Peak Gold Joint Venture Property.

The Joint Venture Company anticipates cash needs of approximately $3.6 million in last calendar quarter of 2020 primarily related to drilling and testing, environmental work, engineering studies, and other items, of which the Company will be obligated to contribute $1.1 million.

As of December 31, 2020, the Company had funded a total of $2.4 million to the Joint Venture Company for its portion of the calendar year 2020 budget.

During the last calendar quarter of 2020, the Joint Venture Company engaged in drilling and testing, environmental work, engineering studies, and other items.

On December 10, 2020, the Management Committee of the Joint Venture Company (the “ Management Committee”) approved a total budget of $18.0 million for the calendar year 2021 to undertake in-fill drilling, engineering and environmental studies necessary to complete a feasibility level study, additional exploration, community relations, and to prepare the project for formal permitting.

The Company’s proportionate share of the approved budget is approximately $5.4 million.

In addition, the Company plans to fund a roughly $3.0 million exploration program to explore for additional resources on 100%-owned Triple Z prospect in late 2021, focused on the areas immediately adjacent to the known Joint Venture Company resources.

The Company also plans to continue its exploration efforts on its earlier stage Eagle and Hona projects located immediately north of the Peak Gold project area.

The Company’s 30.0% membership interest in the Joint Venture Company, its ownership of Contango Minerals, and cash on hand constitute substantially all of the Company’s assets.

The Company has no borrowings.

The Company has no debt.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including instructions to Form 10 -Q and Article 8 of Regulation S- X.

Accordingly, they do not include all the information and footnotes required by GAAP for complete annual consolidated financial statements.

In the opinion of management, all adjustments considered necessary for a fair statement of the consolidated financial statements have been included.

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including instructions to Form 10 -Q and Article 8 of Regulation S- X.

Accordingly, they do not include all the information and footnotes required by US GAAP for complete annual consolidated financial statements.

In the opinion of management, all adjustments considered necessary for a fair presentation of the consolidated financial statements have been included.

All such adjustments are of a normal recurring nature.

The consolidated financial statements should be read in conjunction with the audited financial statements and notes included in the Company ’s Form 10 -K for the fiscal year ended June 30, 2020.

The results of operations for the three months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2021.

The consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes included in the Company ’s Form 10 -K for the fiscal year ended June 30, 2020.

The results of operations for the three and six months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2021.

Summary of Significant Accounting Policies

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Management Estimates.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates .

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The Company’s consolidated financial statements include the investment in the Joint Venture Company, which is accounted for under the equity method.

The Company held a 30.0% membership interest in the Joint Venture Company on September 30, 2020 and designated one of the three members of the Management Committee.

The Company held a 30.0% membership interest in the Joint Venture Company on December 31, 2020 and designated one of the three members of the Management Committee.

The Company recorded its investment at the historical cost of the assets contributed.

The cumulative losses of the Joint Venture Company exceed the historical cost of the assets contributed to the Joint Venture Company;

therefore the Company’s investment in the Joint Venture Company as of September 30, 2020 and June 30, 2020 is zero.

therefore, the Company’s investment in the Joint Venture Company as of December 31, 2020 and June 30, 2020 is zero.

The portion of the cumulative loss that exceeds the Company’s investment will be suspended and recognized against earnings, if any, from the investment in the Joint Venture Company in future periods.

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Level 3 – Unobservable inputs for which there are little or no market data and which the Company makes its own assumptions about how market participants would price the assets and liabilities.

The Company received 809,744 shares of its common stock as part of the consideration received for sale of a portion of its membership interest in the Joint Venture Company (See Note 8 for further discussion of the sale transaction with KG Mining).

The Company received 809,744 shares of its Common Stock as part of the consideration received for the sale of a portion of its membership interest in the Joint Venture Company (See Note 8 for further discussion of the sale transaction with KG Mining).

The value assigned to the Company’s remaining 30.0% membership interest in the Joint Venture Company was determined using unobservable data and was a significant component used to determine the value of the shares.

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The Company accounts for the Joint Venture Company under the equity method of accounting.

We do not anticipate that this update will have a material impact on our financial statements.

The Company does not anticipate that this update will have a material impact on its financial statements.

The Company has evaluated all other recent acco unting pronouncements and believes that none of them will have a significant effect on the Company’s consolidated financial statements .

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The Company initially recorded its investment at the historical book value of the assets contributed to the Joint Venture Company, which was approximately $1.4 million.

As of September 30, 2020, the Company has contributed approximately $12.1 million to the Joint Venture Company.

KG Mining acquired 70% of the Joint Venture on September 30, 2020 in connection with the Kinross Transactions.

As of September 30, 2020, the Company held a 3 0.0% membership interest in the Joint Venture Company.

The following table is a roll-forward of our investment in the Joint Venture Company from January 8, 2015 ( inception) to September 30, 2020:

As of December 31, 2020, the Company has contributed approximately $13.2 million to the Joint Venture Company.

KG Mining acquired 70% of the Joint Venture Company on September 30, 2020 in connection with the Kinross Transactions.

As of December 31, 2020, the Company held a 3 0.0% membership interest in the Joint Venture Company.

The following table is a roll-forward of the Company's investment in the Joint Venture Company from January 8, 2015 ( inception) to December 31, 2020:

in Peak Gold, LLC

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Loss from equity investment in Peak Gold, LLC

Investment balance at September 30, 2020

The following table presents the condensed unaudited balance sheet for the Joint Venture Company as of September 30, 2020 and June 30, 2020:

September 30, 2020

June 30, 2020

Cash and cash equivalents

Mineral properties

LIABILITIES AND MEMBERS’ EQUITY

Accounts payable and other liabilities

TOTAL LIABILITIES

MEMBERS’ EQUITY

TOTAL LIABILITIES AND MEMBERS’ EQUITY

The Company’s share of the Joint Venture Company’s results of operations for the three months ended September 30, 2020 was a loss of approximately $0.4 million.

The Company’s share in the results of operations for the three months ended September 30 , 2019 was a loss of approximately $1.7 million .

The Joint Venture Company loss does not include any provisions related to income taxes as the Joint Venture Company is treated as a partnership for income tax purposes.

As of September 30, 2020 and June 30, 2020, the Company’s share of the Joint Venture Company’s inception-to-date cumulative loss of approximately $35.1 million and $34.7 million, respectively, exceeded the historical book value of our investment in the Joint Venture Company, of $12.1 million.

Therefore, the investment in the Joint Venture Company had a balance of zero as of each September 30, 2020 and June 30, 2020.

The Company is currently obligated to make additional capital contributions to the Joint Venture Company in proportion to its percentage membership interest in the Joint Venture Company in order to maintain its ownership in the Joint Venture Company and not be diluted.

Therefore, the Company only records losses up to the point of its cumulative investment, which was approximately $12.1 million as of September 30, 2020.

The portion of the cumulative loss that exceeds the Company’s investment will be suspended and recognized against earnings, if any, from the Company’s investment in the Joint Venture Company in future periods.

The suspended losses for the period from inception to September 30, 2020 are approximately $23.0 million.

The following table presents the condensed unaudited results of operations for the Joint Venture Company for the three month period ended September 30, 2020 and 2019, and for the period from inception through September 30, 2020:

Investment balance at December 31, 2020

In conjunction with the CORE Transactions, and Kinross assuming the role of manager of the Joint Venture Company, the Joint Venture Company converted its method of accounting from US GAAP to International Financial Reporting Standards (“IFRS”) and changed its fiscal year end from June 30 to December 31, effective for the quarter ended December 31, 2020.

The condensed unaudited financial statements presented below have been converted from IFRS to US GAAP for presentation purposes.

The following table presents the condensed unaudited results of operations for the Joint Venture Company for the three and six month period ended December 31, 2020 and 2019, and for the period from inception through December 31, 2020 in accordance with US GAAP;

Three Months Ended

Six Months Ended

Period from Inception January 8, 2015 to

September 30, 2020

September 30, 2019

September 30, 2020

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

December 31, 2020

Exploration expense

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Total expenses

The Company’s share of the Joint Venture Company’s results of operations for the three and six months ended December 31, 2020 was a loss of approximately $0.9 million and $1.3 million, respectively.

The Company’s share in the results of operations for the three and six months ended December 31 , 2019 was a loss of approximately $0.9 million and $2.6 million, respectively .

The Joint Venture Company loss does not include any provisions related to income taxes as the Joint Venture Company is treated as a partnership for income tax purposes.

As of December 31, 2020 and June 30, 2020, the Company’s share of the Joint Venture Company’s inception-to-date cumulative loss of approximately $36.0 million and $34.7 million, respectively, exceeded the historical book value of our investment in the Joint Venture Company, of $13.2 million.

Therefore, the investment in the Joint Venture Company had a balance of zero as of each December 31, 2020 and June 30, 2020.

Therefore, the Company only records losses up to the point of its cumulative investment, which was approximately $13.2 million as of December 31, 2020.

The suspended losses for the period from inception to December 31, 2020 are approximately $21.8 million.

Prepaid Expenses and other

The Company has prepaid expenses of $172,519 and $72,244 as of September 30, 2020 and June 30, 2020, respectively.

Prepaid expenses primarily relate to prepaid insurance and management fees.

The Company has prepaid expenses of $412,761 and $72,244 as of December 31, 2020 and June 30, 2020, respectively.

Prepaid expenses primarily relate to prepaid insurance, prepaid annual claim rentals, and management fees.

Net Income/(Loss) Per Share

A reconciliation of the components of basic and diluted net loss per share of Common Stock is presented below:

Three Months Ended September 30,

A reconciliation of the components of basic and diluted net income/(loss) per share of Common Stock is presented below:

Three Months Ended December 31,

Weighted Average Shares

Basic Net Loss per Share:

Net income/(loss) attributable to common stock

Diluted Net Loss per Share:

Net income/(loss) attributable to common stock

Six Months Ended December 31,

Weighted Average Shares

Loss Per Share

Basic Net Income/(Loss) per Share:

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Net income/(loss) attributable to common stock

Options to purchase 100,000 shares of Common Stock of the Company were outstanding as of September 30, 2020 and June 30, 2020 respectively.

The 100,000 options were not included in the computation of diluted earnings per share for the applicable fiscal year, due to their being out of the money for the period ended September 30, 2020.

There were no options or warrants outstanding as of September 30, 2019.

Options to purchase 100,000 shares of Common Stock of the Company were outstanding as of December 31, 2020 and June 30, 2020 respectively.

The 100,000 options were not included in the computation of diluted earnings per share for the quarter ended December 31, 2020 due to being anti-dilutive.

The 100,000 options were not included for the quarter ended September 30, 2020 due to the options being out of the money for such period.

There were no options or warrants outstanding as of December 31, 2019.

Shareholders ’ Equity

The Company ’s authorized capital stock consists of 30,000,000 shares of Common Stock and 15,000,000 shares of preferred stock.

As of September 30, 2020, we had 5,994,667 shares of Common Stock outstanding, including 534,666 share s of unvested restricted stock, which takes into account the issuance of shares of Common Stock in the 2020 Private Placement as described below and the redemption of 809,744 shares of Common Stock from KG Mining in the Kinross Transactions .

As of September 30, 2020, we also had outstanding options to purchase 100,000 shares of Common Stock of the Company.

On December 11, 2020, at the Annual Meeting, the Company’s stockholders approved the proposal to amend the Company’s Certificate of Incorporation to increase the number of authorized shares of its Common Stock from 30,000,000 shares to 45,000,000 shares.

The Company has 15,000,000 authorized shares of preferred stock.

As of December 31, 2020, the Company had 6,200,500 shares of Common Stock outstanding, including 740,499 share s of unvested restricted stock, which takes into account the issuance of shares of Common Stock in the 2020 Private Placement as described below and the redemption of 809,744 shares of Common Stock from KG Mining in the Kinross Transactions .

As of December 31, 2020, the Company also had outstanding options to purchase 100,000 shares of Common Stock of the Company.

No shares of preferred stock have been issued.

The remaining restricted stock outstanding will vest between January 2021 and January 2022.

The remaining restricted stock outstanding will vest between January 2021 and December 2023.

On September 23, 2020, the Company completed the issuance and sale of an aggregate of 247,172 shares of Common Stock, in a private placement (the “2020 Private Placement”) to certain purchasers who are accredited investors.

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The Company’s President and Chief Executive Officer, Rick Van Nieuwenhuyse, purchased 75,472 shares of Common Stock of the Company in the 2020 Private Placement, for total consideration of $1.0 million, on the same terms and conditions as all other purchasers.

As a result of Mr.

Van Nieuwenhuyse’s purchase, as of September 23, 2020, his ownership interest in the Company is now 2.2%.

The Audit Committee of the Company has reviewed and approved all agreements and arrangements relating to Mr.

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KG Mining now holds a 70.0% membership interest in the Joint Venture Company and serves as the manager and operator of the Joint Venture Company.

KG Mining and CORE Alaska entered into the A&R JV LLCA on October 1, 2020 to address the new ownership arrangements and to incorporate additional terms that will permit the Joint Venture Company to further develop and produce from its properties (see Note 13 - Subsequent Events).

The Company recorded the $32.4 million cash proceeds and the 809,744 shares of Common Stock, received from the CORE Transactions, at fair value and recognized a gain on sale of $39.6 million.

The Company valued the Common Stock consideration from the CORE Transactions consistent with the accounting guidance for non-monetary exchanges.

The stock consideration was valued based on the implied fair value of the transaction in total less the cash proceeds.

The total value of the transaction was equated to the value of the Company's 30.0% ownership in the Joint Venture Company, post the 30.0% membership interest transferred to KG Mining.

The stock consideration was valued based on the implied fair value of the CORE Transactions in total less the cash proceeds.

The total value of the CORE Transactions was equated to the value of the Company's 30.0% ownership in the Joint Venture Company, post the 30.0% membership interest transferred to KG Mining.

The Common Stock consideration received in the CORE Transactions is classified within Level 3 of the fair value hierarchy referenced in Note 3 - Summary of Significant Accounting Policies.

As of the date of the transaction, the Company's investment in the Joint Venture Company had a zero balance, therefore the $39.6 million gain approximates the full fair value of the JV Interest surrendered in the CORE Transactions.

As of the date of the CORE Transactions, the Company's investment in the Joint Venture Company had a zero balance, therefore the $39.6 million gain approximates the full fair value of the JV Interest surrendered in the CORE Transactions.

The Company recorded a non-current liability totaling $1.2 million associated with the cash received for the reimbursement prepayment to the Company of its proportionate share of certain silver royalty payments that the Joint Venture Company may be obligated to pay Royal Gold.

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Prior to the Kinross Transactions, the Joint Venture Company, Contango Minerals, the Company, CORE Alaska, Royal Gold and Royal Alaska entered into the Separation Agreement.

Pursuant to the Separation Agreement, the Joint Venture Company completed the formation of Contango Minerals, and contributed approximately 168,000 acres of Alaska State mining claims to it, subject to the Option Agreement (defined below), and retained an additional 1.0% net smelter returns royalty interest on certain of the contributed Alaska state mining claims that were contributed.

After the formation and contribution to Contango Minerals, the Joint Venture Company made simultaneous distributions to Royal Alaska and CORE Alaska by (i) granting to Royal Gold a new 28.0% net smelter returns silver royalty on all silver produced from a defined area within the Tetlin Lease and also transferring the additional 1.0% net smelter returns royalty described above on the contributed Alaska state mining claims to Royal Gold and (ii) assigning one hundred percent (100%) of the membership interests in Contango Minerals to CORE Alaska, which were in turn distributed to the Company, resulting in Contango Minerals becoming a wholly-owned subsidiary of the Company.

Pursuant to the Separation Agreement, the Joint Venture Company completed the formation of Contango Minerals, and contributed approximately 167,000 acres of Alaska State mining claims to it, subject to the Option Agreement (described below), and retained an additional 1.0% net smelter returns royalty interest on certain of the contributed Alaska state mining claims that were contributed.

After the formation and contribution to Contango Minerals, the Joint Venture Company made simultaneous distributions to Royal Alaska and CORE Alaska by (i) granting to Royal Gold a new 28.0% net smelter returns silver royalty on all silver produced from a defined area within the Tetlin Lease and also transferring the additional 1.0% net smelter returns royalty described above on the contributed Alaska state mining claims to Royal Gold (bringing the total net smelter royalty due to Royal Gold to 3%) and (ii) assigning one hundred percent (100%) of the membership interests in Contango Minerals to CORE Alaska, which were in turn distributed to the Company, resulting in Contango Minerals becoming a wholly-owned subsidiary of the Company.

The Separation Agreement contains customary representations, warranties and covenants.

The distribution of the Alaska state mining claims to Contango Minerals meets the definition of a non-reciprocal nonmonetary transfer as defined in ASC 845 and would generally be recorded at fair value to the extent fair value is determinable.

The distribution of the Alaska state mining claims to Contango Minerals meets the definition of a non-reciprocal nonmonetary transfer as defined in Accounting Standards Codification (“ASC”) 845 and would generally be recorded at fair value to the extent fair value is determinable.

However, to date, the Joint Venture Company's gold exploration has concentrated on the Tetlin Lease (which was retained by the Joint Venture Company), with only a limited amount of work performed on the State of Alaska mining claims.

The Company has concluded, that the fair value of the state claims is not determinable within reasonable limits, and therefore has recorded the distribution at historical book value.

The Joint Venture Company’s historical book value associated with the Alaska state mining claims is zero as of the date of the transaction because the costs associated with exploration performed on these claims were expensed when incurred.

Therefore, the Company's balance sheet has a net book value of zero for these claims as of the date of the Transactions.

The Joint Venture Company’s historical book value associated with the Alaska state mining claims is zero as of the date of the CORE Transactions because the costs associated with exploration performed on these claims were expensed when incurred.

Therefore, the Company's balance sheet has a net book value of zero for these claims as of the date of the CORE Transactions.

In connection with the Separation Agreement, the Joint Venture Company and Contango Minerals entered into the Option Agreement.

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The signing of the Option Agreement did not result in any accounting implications for the Company.

Prior to the Transactions, the Joint Venture Company was a variable interest entity as defined by FASB ASU No.

On October 1, 2020, CORE Alaska and KG Mining entered into the A&R JV LLCA.

The A&R JV LLCA supersedes and replaces in its entirety the JV LLCA, as amended.

The A&R JV LLCA is the operating agreement for the Joint Venture Company and provides for understandings between the members with respect to matters regarding percentage ownership interests, governance, transfers of ownership interests and other operational matters.

CORE Alaska and KG Mining will be required, subject to the terms of the A&R JV LLCA, to make additional capital contributions to the Joint Venture Company for any approved programs budgets in accordance with their respective percentage membership interests.

After the consummation of the Kinross Transactions, Kinross, through KG Mining, replaced Royal Gold as the Company’s joint venture partner and as manager of the Joint Venture Company.

After consummation of the Kinross Transactions, CORE Alaska holds a 30.0% membership interest in the Joint Venture Company and KG Mining holds a 70.0% membership interest in the Joint Venture Company.

The A&R JV LLCA established the Management Committee to determine the overall policies, objectives, procedures, methods and actions of the Joint Venture Company.

The Management Committee currently consists of one representative designated by CORE Alaska and two representatives designated by KG Mining (each a “Representative”).

The Representatives designated by each member of the Joint Venture Company vote as a group, and in accordance with their respective membership interests in the Joint Venture Company.

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 Joint Venture Company constitutes the action of the Management Committee.

Prior to the CORE Transactions, the Joint Venture Company was a variable interest entity as defined by FASB ASU No.

2015 - 02, Consolidation (Topic 810 ):

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(“JEX”), a private company involved in the exploration and production of oil and natural gas.

On November 20, 2019, the Company entered into an Amended and Restated Management Services Agreement (the “A&R MSA”), with JEX, which amends and restates the Management Services Agreement between the Company and JEX dated as of October 1, 2016.

Pursuant to the A&R MSA, JEX will continue, subject to the direction of the board of directors of the Company, to manage the business and affairs of the Company and its interest in the Joint Venture Company.

The services provided to the Company by JEX include corporate finance, accounting, budget, reporting, risk management, operations and stockholder relation functions of the Company.

On December 11, 2020, the Company entered into a Second Amended and Restated Management Services Agreement (the “A&R MSA”) with JEX, which amends and restates the Amended and Restated Management Services Agreement between the Company and JEX dated as of November 20, 2019.

Pursuant to the A&R MSA, JEX will continue, subject to direction of the board of directors of the Company (the “Board”), to provide certain facilities, equipment and services used in the conduct of the business and affairs of the Company and management of its membership interest in the Joint Venture Company.

Pursuant to the A&R MSA, JEX will provide to the Company office space and office equipment, and certain related services.

The A&R MSA will be effective for one year beginning December 1, 2020, and will renew automatically on a monthly basis as of December 1, 2021 unless terminated upon ninety days’ prior notice by either the Company or JEX.

Pursuant to the A&R MSA, the Company will pay to JEX a monthly fee of $10,000, which includes an allocation of approximately $6,900 for office space and equipment.

JEX will also be reimbursed for its reasonable and necessary costs and expenses of third parties incurred for the Company.

No part of the fee payable to JEX pursuant to the A&R MSA is allocated for compensation of Brad Juneau who is compensated separately as determined by the independent directors of the Company.

In addition, executives of JEX may be granted restricted stock, stock options or other forms of compensation by the independent directors of the Company.

The amount of time and expertise required to effectively manage and administer the business and affairs of the Company will continue to be monitored by the board of directors of the Company for necessary adjustments or modifications depending upon the amount of time required to be spent on the business and affairs of the Company by the executives and the progress of the Joint Venture Company in its exploratory programs in Alaska.

The A&R MSA includes customary indemnification provisions.

On September 23, 2020, the Company completed the issuance and sale of an aggregate of 247,172 shares of the Company’s Common Stock, in a private placement to certain purchasers who are accredited investors.

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As a result of Mr.

Van Nieuwenhuyse’s purchase, as of September 23, 2020, his ownership interest in the Company is 2.2%.

Van Nieuwenhuyse’s purchase, as of September 23, 2020, his ownership interest in the Company was 2.2%.

Petrie acted as the sole placement agent in connection with the 2020 Private Placement and received a placement agent fee equal to 3.25% of the gross proceeds raised from the subscribers whom they solicited, or a total of approximately $0.05 million in placement agent fees.

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On September 30, 2020, in a series of related transactions, Kinross, through its wholly owned subsidiary, acquired all of the interest in the Joint Venture Company held by Royal Gold and an additional 30.0% membership interest in the Joint Venture Company held by the Company.

The Company, through its wholly owned subsidiary, retained a 30.0% membership interest in the Joint Venture Company, with Kinross acquiring a 70.0% membership interest in the Joint Venture Company and becoming as the manager and operator of the Joint Venture Company.

The Company, through its wholly owned subsidiary, retained a 30.0% membership interest in the Joint Venture Company, with Kinross acquiring a 70.0% membership interest in the Joint Venture Company and becoming the manager and operator of the Joint Venture Company.

Prior to and in connection with the Kinross Transactions, on September 29, 2020, Contango Minerals entered into an Omnibus Second Amendment and Restatement of Royalty Deeds (the “Contango Minerals Royalty Agreement”) with Royal Gold.

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On April 16, 2018, Royal Gold filed a Schedule 13D with the Securities and Exchange Commission to reflect Royal Gold’s acquisition from an existing stockholder of 13.6% of the Company’s outstanding Common Stock at a price of $26 per share, subject to certain adjustments.

Royal Gold also filed amendments to its Schedule 13D on June 29, 2018, October 4, 2018, January 22, 2019, August 2, 2019, and September 30, 2020.

Immediately prior to the consummation of the transactions, Royal Gold held 809,744 shares of Common Stock, representing approximately 11.9% of the issued and outstanding shares of Common Stock immediately prior to the transactions.

As of September 30, 2020 Royal Gold reported beneficial ownership of approximately 0.0% of the Company’s outstanding Common Stock.

Royal Gold sold all of the Common Stock it owned to KG Mining as a part of the Royal Gold Transactions discussed in Note 1.

Royal Gold also filed amendments to its Schedule 13D on June 29, 2018, October 4, 2018, January 22, 2019, August 2, 2019, and December 31, 2020.

Immediately prior to the consummation of the Kinross Transactions, Royal Gold held 809,744 shares of Common Stock, representing approximately 11.9% of the issued and outstanding shares of Common Stock immediately prior to the Kinross Transactions.

On September 30, 2020, Royal Gold reported beneficial ownership of approximately 0.0% of the Company’s outstanding Common Stock.

Royal Gold sold all of the Common Stock it owned to KG Mining as a part of the Royal Gold Transactions described in Note 1.

Royal Gold is the parent company of Royal Alaska, CORE’s former joint venture partner in the Joint Venture Company.

Stock-Based Compensation

On September 15, 2010, the Company’s Board of Directors (the “Board”) adopted the Contango ORE, Inc.

On September 15, 2010, the Board adopted the Contango ORE, Inc.

Equity Compensation Plan (the “2010 Plan”).

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and (c) allowing the Company to withhold shares to satisfy the Company ’s tax withholding obligations with respect to grants paid in Company Stock.

On November 13, 2019, the Stockholders of the Company approved and adopted the First Amendment (the “Amendment”) to the Contango ORE, Inc.

Amended and Restated 2010 Equity Compensation Plan (as amended, the “Equity Plan”) which increases the number of shares of Common Stock that the Company may issue under the Equity Plan by 500,000 shares.

On November 13, 2019, the Stockholders of the Company approved and adopted the First Amendment (the “Amendment”) to the Amended Equity Plan (as amended, the “Equity Plan”) which increased the number of shares of Common Stock that the Company may issue under the Equity Plan by 500,000 shares.

Under the Equity Plan, the Board may issue up to 2,000,000 shares of Common Stock and options to officers, directors, employees or consultants of the Company.

Awards made under the Equity Plan are subject to such restrictions, terms and conditions, including forfeitures, if any, as may be determined by the Board.

As of September 30, 2020, there were 534,666 shares of unvested restricted Common Stock outstanding and 100,000 options to purchase shares of Common Stock outstanding issued under the Equity Plan.

Stock-based compensation expense for the three months ended September 30, 2020 was $892,158.

Stock-based compensation expense for the three months ended September 30, 2019 was $740,442 .

The amount of compensation expense recognized does not reflect cash compensation actually received by the individuals during the current period, but rather represents the amount of expense recognized by the Company in accordance with GAAP.

On December 11, 2020, the Board, upon recommendation of the Compensation Committee of the Board (the “Compensation Committee”), adopted the Second Amendment to the Equity Plan to increase the maximum aggregate number of shares of Common Stock of the Company with respect to which award grants may be made under the Equity Plan to any individual during a calendar year from 100,000 shares to 300,000 shares.

As of December 31, 2020, there were 740,499 shares of unvested restricted Common Stock outstanding and 100,000 options to purchase shares of Common Stock outstanding issued under the Equity Plan.

Stock-based compensation expense for the three and six months ended December 31, 2020 was $1,009,900 and $1,902,058, respectively.

Stock-based compensation expense for the three and six months ended December 31, 2019 was $882,881 and $1,623,323, respectively .

All restricted stock grants are expensed over the applicable vesting period based on the fair value at the date the stock is granted.

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In November 2018, the Company granted 155,000 restricted shares of Common Stock to its executives and non-executive directors.

The restricted stock granted vests in January 2021.

As of September 30, 2020, there were 155,000 shares of such restricted stock that remained unvested.

The restricted stock granted vested in January 2021.

As of December 31, 2020, there were 155,000 shares of such restricted stock that remained unvested.

In December 2018, the Company canceled 117,332 shares of unvested restricted stock held by two of its executives and the non-executive directors that were set to vest on January 1, 2019.

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The impact of the modification to the current quarter was immaterial.

All of the restricted stock granted in December 2018 vest in January 2021.

As of September 30, 2020, there were 146,666 shares of such restricted stock that remained unvested.

All of the restricted stock granted in December 2018 vested in January 2021.

As of December 31, 2020, there were 146,666 shares of such restricted stock that remained unvested.

In November 2019, the Company granted 158,000 restricted shares of Common Stock to its executives and non-executive directors.

The restricted stock granted vests in January 2022.

As of September 30, 2020, there were 158,000 shares of such restricted stock that remained unvested.

As of December 31, 2020, there were 158,000 shares of such restricted stock that remained unvested.

In connection with the appointment of Rick Van Nieuwenhuyse as the President and Chief Executive Officer of the Company, on January 9, 2020, the Company issued 75,000 shares of restricted stock to Mr.

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Van Nieuwenhuyse’s employment with the Company and half on the second anniversary of his employment with the Company, subject to acceleration upon a change of control of the Company.

As of September 30, 2020 , the total compensation cost related to unvested awards not yet recognized was $2,474,798.

On December 1, 2020, the Company granted an aggregate 20,000 shares of Common Stock to two new employees.

The restricted stock granted to such employees vests in equal installments over three years on the anniversary of the grant date.

On December 11, 2020, the Company granted 162,500 restricted shares of Common Stock to its executives and non-executive directors.

The restricted stock granted to the executives and non-executive directors vests between January 2022 and January 2023.

On December 11, 2020 the Company also granted Mr.

Van Nieuwenhuyse 23,333 shares of restricted stock in conjunction with his short-term incentive plan, and such shares will vest in January 2022.

As of December 31, 2020, all 205,833 shares of restricted stock granted in December 2020 remained unvested.

As of December 31, 2020 , the total compensation cost related to unvested awards not yet recognized was $5,240,642.

The remaining costs will be recognized over the remaining vesting period of the awards.

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Van Nieuwenhuyse’s employment with the Company and half on the second anniversary of his employment with the Company, subject to acceleration upon a change of control of the Company.

There were no stock option exercises during the three months ended September 30, 2020 .

There were also no stock option exercises during the three months ended September 30, 2019.

There were no stock option exercises during the three and six months ended December 31, 2020 .

There were also no stock option exercises during the three and six months ended December 31, 2019.

The Company applies the fair value method to account for stock option expense.

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The fair value of each option is estimated as of the date of grant using the Black-Scholes options-pricing model.

As of September 30, 2020, the stock options had a weighted-average remaining life of 4.27 years.

The total compensation cost related to nonvested options not yet recognized as of September 30, 2020 was $470,339.

A summary of the status of stock options granted under the Equity Plan as of September 30, 2020 and changes during the nine months then ended, is presented in the table below:

Three Months Ended

September 30, 2020

As of December 31, 2020, the stock options had a weighted-average remaining life of 4.02 years.

The total compensation cost related to nonvested options not yet recognized as of December 31, 2020 was $377,589.

A summary of the status of stock options granted under the Equity Plan as of December 31, 2020 and changes during the six months then ended, is presented in the table below:

Six Months Ended

December 31, 2020

Shares Under Options

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Additionally, should the Joint Venture Company derive revenues from the properties covered under the Tetlin Lease, the Joint Venture Company is required to pay the Tetlin Tribal Council a production royalty ranging from 3 .0% to 5.0%, depending on the type of metal produced and the year of production.

As of September 30, 2020, the Company had paid the Tetlin Tribal Council $225,000 in exchange for reducing the production royalty payable to them by 0.75%.

The Company previously paid the Tetlin Tribal Council $225,000 in exchange for reducing the production royalty payable to them by 0.75%.

These payments lowered the production royalty to a range of 2 .25% to 4.25%.

On or before July 15, 2020, the Tetlin Tribal Council had the option to increase their production royalty by (i) 0.25% by payment to the Joint Venture Company of $150,000, (ii) 0.50% by payment to the Joint Venture Company of $300,000, or (iii) 0.75% by payment to the Joint Venture Company of $450,000.

The Tetlin Tribal Council had the option to increase their production royalty by (i) 0.25% by payment to the Joint Venture Company of $150,000, (ii) 0.50% by payment to the Joint Venture Company of $300,000, or (iii) 0.75% by payment to the Joint Venture Company of $450,000.

The Tetlin Tribal Council exercised the option to increase its production royalty by 0.75% by payment to the Joint Venture Company of $450,000 on December 30, 2020.

In lieu of a cash payment, the $450,000 will be credited against future production royalty and advance minimum royalty payments due by the Joint Venture Company to the Tetlin Tribal Council under the lease once production begins.

The exercise of this option by the tribe did not have an accounting impact to the Company.

Until such time as production royalties begin, the Joint Venture Company must pay the Tetlin Tribal Council an advance minimum royalty of $50,000 per year.

On July 15, 2012, the advance minimum royalty increased to $75,000 per year, and subsequent years are escalated by an inflation adjustment.

The Management Committee extended the Tetlin Tribal Council’s option until December 31, 2020.

Gold Exploration.

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Annual claims rentals for the 2020 - 2021 assessment year totaled $294,435.

As of September 30, 2020, the Joint Venture Company had met the annual labor requirements for the state of Alaska acreage for the next four years, which is the maximum time allowable by Alaska law.

The Company paid the current year claim rentals in November 2020, and recorded the payment within prepaid assets.

The associated rental expense is amortized over the rental claim period, September 1 - August 31st of each year.

As of December 31, 2020, the Joint Venture Company had met the annual labor requirements for the state of Alaska acreage for the next four years, which is the maximum time allowable by Alaska law.

The Company obtained 100% ownership of these claims in conjunction with the Separation Agreement.

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Initially, the Joint Venture Company was obligated to pay Royal Gold (i) an overriding royalty of 3.0% should the Joint Venture Company derive revenues from the Tetlin Lease, the Additional Properties and certain other properties and (ii) an overriding royalty of 2.0% should the Joint Venture Company derive revenues from certain other properties.

In conjunction with the Separation Agreement (discussed in Note 1), the Joint Venture Company granted a new 28.0% net smelter returns silver royalty on all silver produced from a defined area within the Tetlin Lease and transferred an additional 1.0% net smelter returns royalty on the state mining claims to Royal Gold.

In conjunction with the Separation Agreement (described in Note 1), the Joint Venture Company granted a new 28.0% net smelter returns silver royalty on all silver produced from a defined area within the Tetlin Lease and transferred an additional 1.0% net smelter returns royalty on the state mining claims to Royal Gold.

Therefore, Royal Gold currently holds a 3.0% overriding royalty on the Tetlin Lease and the state mining claims that were transferred to the Company in conjunction with the Separation Agreement.

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Van Nieuwenhuyse in an amount up to 200.0% of his annual base salary, payable in cash, shares of Common Stock of the Company under the Equity Plan or a combination of both, as determined by the Compensation Committee, not later than 30 days following such Change of Control.

The Company recognized a full valuation allowance on its deferred tax asset as of September 30, 2020 and June 30, 2020 and has recognized $2.4 million in income tax expense for the three months ended September 30, 2020 and zero for the three months ended September 30, 2019.

The current income tax expense of $2.4 million consists of $1.8 million of federal income tax expense and $0.6 million of Alaskan state income tax expense.

The effective tax rate was 6.71% and 0% for the quarters ending September 30, 2020 and September 30, 2019, respectively.

We have historically had a full valuation allowance, which resulted in no net deferred tax asset or liability appearing on our statement of financial position.

We recorded this valuation allowance after an evaluation of all available evidence (including our history of net operating losses) that led to a conclusion that based upon the more-likely-than-not standard of the accounting literature, these deferred tax assets were unrecoverable.

Although the Company is forecasting book and taxable income for June 30, 2021, this income is driven by the gain on the sale of the JV interest in connection with the Kinross Transactions.

In conjunction with STIP plan, in December 2020, Mr.

Van Nieuwenhuyse received a $350,000 cash bonus and 23,333 restricted shares of Common Stock, which vest on January 1, 2022.

The Company recognized a full valuation allowance on its deferred tax asset as of December 31, 2020 and June 30, 2020 and has recognized $0.6 million income tax benefit and $1.8 million in income tax expense for the three and six months ended December 31, 2020.

The Company recognized income tax expense of zero for the three and six months ended December 31, 2019.

The current income tax expense for the six months ended December 31, 2020 of $1.8 million consists of $1.3 million of federal income tax expense and $0.5 million of Alaskan state income tax expense.

The effective tax rate was 5.71% and 0% for the six months ending December 31, 2020 and December 31, 2019, respectively.

The Company has historically had a full valuation allowance, which resulted in no net deferred tax asset or liability appearing on its statement of financial position.

The Company recorded this valuation allowance after an evaluation of all available evidence (including the Company's history of net operating losses) that led to a conclusion that, based upon the more-likely-than-not standard of the accounting literature, these deferred tax assets were unrecoverable.

Although the Company is forecasting book and taxable income for June 30, 2021, this income is driven by the gain on the sale of the CORE JV Interest in connection with the Kinross Transactions.

This gain does not represent a source of continual income to the Company.

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The Company reviews its tax positions quarterly for tax uncertainties.

The Company did not have any uncertain tax positions as of September 30, 2020 or June 30, 2020.

The Company did not have any uncertain tax positions as of December 31, 2020 or June 30, 2020.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted.

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corporate income tax rate from 35.0% to 21.0%, and makes changes to certain other business-related exclusions, deductions and credits.

The Company has assessed the impact of the tax bill on the financial statements as of September 30, 2020.

The Company has assessed the impact of the tax bill on the financial statements as of December 31, 2020.

The Company will continue to monitor these new regulations and analyze their applicability and impact on the Company.

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The CARES Act includes several tax incentives.

Among them are an increase to the IRC Section 163(j) limitation, temporary relief from the 80% limitation on NOLs, an ability to carry back NOLs, as well as some technical corrections related to the TCJA.

Subsequent Events

On October 1, 2020, CORE Alaska and KG Mining entered into the A&R JV LLCA.

The A&R JV LLCA supersedes and replaces in its entirety the JV LLCA, as amended.

As of October 1, 2020, and as stated in the A&R JV LLCA, the capital contributions and capital account balance of CORE Alaska was $39.6 million and the capital contributions and capital account balance of KG Mining was $92.5 million.

After the consummation of the Kinross Transactions, Kinross, through KG Mining, replaced Royal Gold as the Company’s joint venture partner and as Manager (defined below) of the Joint Venture Company.

The A&R JV LLCA establishes a management committee (the “Management Committee”) to determine the overall policies, objectives, procedures, methods and actions of the Joint Venture Company.

The Management Committee currently consists of one representative designated by CORE Alaska and two representatives designated by KG Mining (each a “Representative”).

The Representatives designated by each member of the Joint Venture Company shall vote as a group, and in accordance with their respective membership interests in the Joint Venture Company.

Except for matters that require the approval of the Management Committee under the terms of the A&R JV LLCA, the manager of the Joint Venture Company (the “Manager”) has the power and authority to make any other decision for and on behalf of the Joint Venture Company.

Specifically, the Manager will implement the decisions of the Management Committee and manage, direct and control the operation of the Joint Venture Company in accordance with approved programs and budgets.

KG Mining is currently appointed as the Manager with overall management responsibility for operations of the Joint Venture Company.

KG Mining may resign as Manager and can be removed as Manager under certain circumstances as provided in the A&R JV LLCA.

The programs and budgets for each calendar year are prepared by the Manager and must be approved by the Management Committee.

On a quarterly basis, subject to provisions of the A&R JV LLCA, the members are required to contribute funds to approved programs and budgets in proportion to their respective membership interests in the Joint Venture Company.

If a member elects not to contribute to an approved program and budget, then each member’s proportionate membership interest in the Joint Venture Company will be recalculated, effective as of the beginning of the period covered by such program and budget, by dividing (i) the sum of (a) the value of its contribution as of the beginning of the period covered by the program and budget plus (b) the additional amount, if any, the member has agreed to contribute to the approved program and budget, plus (c) if the member is not the member who elects to contribute less than its proportionate share of the approved program and budget, then the amount, if any, in excess of the contributions required by such member’s proportionate membership interest, by (ii) the sum of (a), (b) and (c) above for all members.

If a member elects to contribute less than its share in proportion to its membership interest and is considered in default, then the non-defaulting member may elect to pay the defaulting member’s capital contribution to the Joint Venture Company on behalf of the defaulting member, and (A) such payment will be treated as a loan to defaulting member, or (B) such payment will be treated as a capital contribution by the non-defaulting member to the Joint Venture Company, and the non-defaulting member’s proportionate membership interest in the Joint Venture Company will be increased by the reduction in the membership interest of the defaulting member.

In the event a member’s membership interest falls below 5.0%, such member shall be deemed to have resigned as a member from the Joint Venture Company, and such member must sell its remaining membership interest to the other member at price determined in accordance with provisions of the A&R JV LLCA.

The members have the right to transfer each of their respective membership interests in the Joint Venture Company to certain permitted transferees, including to their respective affiliates and subsidiaries.

The members may also transfer each of their respective membership interests to a third party, subject to certain terms and conditions set forth in the A&R JV LLCA.

In the event that either member intends to transfer all or part of its membership interest to a bona fide third party, the A&R JV LLCA provides that the other member will have a right of first offer, whereupon the member shall first offer the other member the right to purchase the membership interest in the Joint Venture Company on the same terms and conditions that it intends to sell to a bona fide third party.

The A&R JV LLCA provides that the Joint Venture Company may, at the Manager’s discretion, enter into a toll milling agreement (“Toll Milling Agreement”) with Fairbanks Gold Mining, Inc.

The A&R JV LLCA provides a form of Toll Milling Agreement that sets forth a framework for the terms and conditions pursuant to which FGMI would process the Joint Venture Company’s ore using the Fort Knox Mill and other processing facilities.

The A&R JV LLCA permits the Manager to negotiate the final terms and conditions of the Toll Milling Agreement on behalf of the Joint Venture Company, without any further approval from the Management Committee, subject to certain restrictions set forth in the A&R JV LLCA.

Among them are an increase to the IRC Section 163(j) limitation, temporary relief from the 80% limitation on net operating losses (“NOLs”), an ability to carry back NOLs, as well as some technical corrections related to the Act.

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 we file or furnish them to the Securities and Exchange Commission (“SEC”).

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 Securities and Exchange Commission (“SEC”).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements