Contango ORE Slashes Gold Hedges as Manh Choh Production Rises

Contango ORE Cuts Gold Hedges to 8% as Manh Choh Output Accelerates

Contango ORE (NYSE: CTGO) announced a significant reduction in its gold hedging program, lowering the hedged portion of Manh Choh production from 50% to approximately 8%. The company now has hedges on just 10,000 ounces of gold at $2,100/oz for 2025. Manh Choh, operated by Kinross Gold, is expected to produce 100,000–115,000 gold equivalent ounces in 2025. The move aligns with Contango's strategy to maximize exposure to rising gold prices as output increases.

Gold prices have been trading near all-time highs, recently surpassing $2,300/oz. By reducing hedges, Contango aims to benefit from further upside. The company also reported that Manh Choh's ramp-up remains on track, with full production expected by mid-2025. Contango holds a 30% interest in the project, with Kinross owning the remaining 70%.

Why Contango Is Unwinding Gold Hedges Now

Bullish Gold Outlook Drives Strategy Shift

Contango's decision reflects a bullish view on gold prices, supported by geopolitical uncertainty, central bank buying, and potential Fed rate cuts. The company previously hedged to secure cash flow during the ramp-up phase but now sees greater value in unhedged exposure. CEO Rick Van Nieuwenhuyse noted that the current gold price environment offers a compelling opportunity to reduce hedging and let shareholders benefit from price appreciation.

Manh Choh Production Ramp-Up Reduces Risk

With Manh Choh production ramping successfully, the operational risk has diminished. The mine's 2025 guidance of 100,000–115,000 oz gold equivalent provides a solid base. Contango's unhedged position means every $100/oz move in gold prices could impact its revenue by roughly $3 million annually (based on its 30% share). This leverage makes the stock a potential high-beta play on gold.

Key Levels and Assets to Watch for Gold Traders

Gold prices are testing resistance near $2,350/oz, with a breakout above $2,400 potentially targeting $2,500. Support sits at $2,200. For Contango stock, the unhedged strategy could amplify moves relative to gold. Traders should monitor Manh Choh production updates and Kinross's operational reports. Technical indicators like the RSI and moving averages on gold charts can provide entry timing. For education on using these tools, visit the indicators section.

What This Means for Traders: Leverage and Risk

Contango's reduced hedging creates a leveraged play on gold prices, but it also introduces higher volatility. If gold declines, the stock could fall faster than gold itself. Traders should consider position sizing and risk management. The company's cost structure at Manh Choh is estimated at $1,100/oz, providing a buffer. However, a sharp drop in gold below $2,000 could pressure margins. For those new to trading leveraged equities, the classroom offers foundational lessons. The quiz can help identify your trading style.

Contango's move also signals confidence in the gold market. Other miners may follow suit, reducing hedges to capture upside. This trend could increase sector volatility. Traders can discuss such setups in signal rooms with the community. To trade gold or CTGO, you'll need a brokerage account; compare options at brokers.