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CONTANGO ORE, INC. (Exact Name of Registrant As Specified in Its Charter)

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CONTANGO ORE, INC. (Exact Name of Registrant As Specified in Its Charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35770 CONTANGO ORE, INC. (Exact name of registrant as specified in its charter) DELAWARE 27-3431051 (I.R.S. Employer (State or other jurisdiction of incorporation or organization) Identification No.) 3700 BUFFALO SPEEDWAY, SUITE 925 HOUSTON, TEXAS 77098 (Address of principal executive offices) (Zip code) (713) 877-1311 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, Par Value $0.01 per share CTGO OTCQB Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.: Non- Emerging growth Large accelerated filer ☐ Accelerated filer ☐ accelerated filer ☒ Smaller reporting company ☒ company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The total number of shares of common stock, par value $0.01 per share, outstanding as of November 13, 2020 was 5,994,667. 1 CONTANGO ORE, INC. TABLE OF CONTENTS Page PART I – FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of September 30, 2020 (unaudited) and June 30, 2020 3 Condensed Consolidated Statements of Operations for the three months ended September 30, 2020 and 2019 (unaudited) 4 Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2020 and 2019 (unaudited) 5 Condensed Consolidated Statement of Shareholders’ Equity for the three months ended September 30, 2020 and 2019 (unaudited) 6 Notes to the Unaudited Condensed Consolidated Financial Statements 7 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3. Quantitative and Qualitative Disclosures about Market Risk 47 Item 4. Controls and Procedures 47 PART II – OTHER INFORMATION Item 1. Legal Proceedings 48 Item 1A. Risk Factors 48 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 48 Item 4. Mine Safety Disclosures 48 Item 5. Other Information 48 Item 6. Exhibits 49 All references in this Form 10-Q to the “Company”, “CORE”, “we”, “us” or “our” are to Contango ORE, Inc. 2 CONTANGO ORE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS Item 1 - Financial Statements September 30, 2020 (Unaudited) June 30, 2020 ASSETS CURRENT ASSETS: Cash $ 36,389,609 $ 3,011,918 Prepaid expenses and other 172,519 72,244 Total current assets 36,562,128 3,084,162 TOTAL ASSETS $ 36,562,128 $ 3,084,162 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 1,859,013 $ 83,158 Accrued liabilities 43,974 1,006,237 Income tax payable 2,406,826 — Total current liabilities 4,309,813 1,089,395 NON-CURRENT LIABILITIES: Advance royalty reimbursement 1,200,000 — Total non-current liabilities 1,200,000 — TOTAL LIABILITIES 5,509,813 1,089,395 COMMITMENTS AND CONTINGENCIES (NOTE 11) SHAREHOLDERS’ EQUITY: Common Stock, $0.01 par value, 30,000,000 shares authorized; 5,994,667 shares issued and outstanding at September 30, 2020; 6,590,113 shares issued and 6,557,239 outstanding at June 30, 2020 59,947 65,901 Additional paid-in capital 56,446,454 61,302,249 Treasury stock at cost (0 shares at September 30, 2020; and 32,874 at June 30, 2020) — (476,672 ) Accumulated deficit (25,454,086 ) (58,896,711 ) TOTAL SHAREHOLDERS’ EQUITY 31,052,315 1,994,767 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 36,562,128 $ 3,084,162 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 CONTANGO ORE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September 30, 2020 2019 EXPENSES: Exploration expense $ (20,828 ) $ — General and administrative expense (3,524,992 ) (990,990 ) Total expenses (3,545,820 ) (990,990 ) OTHER INCOME/(EXPENSE): Interest income 214 39,656 Loss from equity investment in Peak Gold, LLC (Note 4) (247,800 ) (900,000 ) Gain on sale of a portion of the equity investment in Peak Gold, LLC 39,642,857 — Total other income/(expense) 39,395,271 (860,344 ) INCOME/(LOSS) BEFORE TAXES 35,849,451 (1,851,334 ) Income tax expense (2,406,826 ) — NET INCOME/(LOSS) $ 33,442,625 $ (1,851,334 ) NET INCOME/(LOSS) PER SHARE Basic and diluted $ 5.09 $ (0.29 ) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic and diluted 6,576,049 6,357,113 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 CONTANGO ORE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended September 30, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) $ 33,442,625 $ (1,851,334 ) Adjustments to reconcile net income/(loss) to net cash used in operating activities: Stock-based compensation 892,158 740,442 Loss from equity investment in Peak Gold, LLC 247,800 900,000 Gain on sale of a portion of the equity investment in Peak Gold, LLC (39,642,857 ) — Changes in operating assets and liabilities: Decrease/(increase) in prepaid expenses and other (100,275 ) 132,750 Increase/(decrease) in accounts payable and accrued liabilities 813,592 (12,165 ) Increase in income taxes payable 2,406,826 — Increase in advance royalty reimbursement 1,200,000 — Net cash used in operating activities (740,131 ) (90,307 ) CASH FLOWS FROM INVESTING ACTIVITIES: Cash invested in Peak Gold, LLC (247,800 ) (900,000 ) Cash proceeds from the sale of a portion of the equity investment in Peak Gold, LLC 31,200,000 — Net cash provided/(used) by investing activities 30,952,200 (900,000 ) CASH FLOWS FROM FINANCING ACTIVITIES: Cash proceeds from capital raise, net 3,165,622 — Net cash provided by financing activities 3,165,622 — NET INCREASE/(DECREASE) IN CASH 33,377,691 (990,307 ) CASH, BEGINNING OF PERIOD 3,011,918 8,600,658 CASH, END OF PERIOD $ 36,389,609 $ 7,610,351 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 CONTANGO ORE, INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited) Additional Total Common Stock Paid-In Treasury Accumulated Shareholders’ Shares Amount Capital Stock Deficit Equity Balance at June 30, 2020 6,590,113 $ 65,901 $ 61,302,249 $ (476,672 ) $ (58,896,711 ) $ 1,994,767 Stock-based compensation — — 892,158 — — 892,158 Issuance of common stock 214,298 2,143 2,796,189 476,672 3,275,004 Cost of common stock issuance (109,382 ) — — (109,382) Shares received from the partial sale of the investment in Peak Gold, LLC and retired (809,744 ) (8,097 ) (8,434,760 ) — (8,442,457 ) Net income for the period — — — — 33,442,625 33,442,625 Balance at September 30, 2020 5,994,667 $ 59,947 $ 56,446,454 $ — $ (25,454,086 ) $ 31,052,315 Additional Total Common Stock Paid-In Accumulated Shareholders’ Shares Amount Capital Deficit Equity Balance at June 30, 2019 6,357,113 $ 63,571 $ 57,935,663 $ (49,656,670 ) $ 8,342,564 Stock-based compensation — — 740,442 — 740,442 Net loss for the period — — — (1,851,334 ) (1,851,334 ) Balance at September 30, 2019 6,357,113 $ 63,571 $ 58,676,105 $ (51,508,004 ) $ 7,231,672 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 CONTANGO ORE, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Business 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. The Company is in an exploration stage. The Company’s fiscal year end is June 30. On January 8, 2015, the Company and a subsidiary of Royal Gold, Inc. (“Royal Gold”) formed the Joint Venture Company. The Company contributed a 100% leasehold interest in an estimated 675,000 acres (the “Tetlin Lease”) from the Tetlin Tribal Council, the council formed by the governing body for the Native Village of Tetlin, an Alaska Native Tribe (the “Tetlin Tribal Council”); and state of Alaska mining claims near Tok, Alaska (together with other property, the “Peak Gold Joint Venture Property”), and Royal Gold made an initial investment into the Joint Venture Company of $5 million.
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