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Note 14 - Debt | 12 Months Ended
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Dec. 31, 2024
Debt Disclosure [Abstract] |
Debt | 14. Debt The table below shows the components of Debt, net as of December 31, 2024 and December 31, 2023:
|  | Fiscal Year Ended December 31, |  |  | Fiscal Year Ended December 31, |
|  | 2023 |  |  | 2024 |
Secured Debt Facility |  |  |  |  |  |
Principal amount |  | $ | 30,000,000 |  |  | $ | 52,100,000 |
Unamortized debt discount |  |  | (2,411,532 | ) |  |  | (1,188,535 | )
Unamortized debt issuance costs |  |  | (2,394,168 | ) |  |  | (1,543,742 | )
Debt, net |  | $ | 25,194,300 |  |  | $ | 49,367,723 |
Convertible Debenture |  |  |  |  |  |
Principal amount |  | $ | 20,000,000 |  |  | $ | 20,000,000 |
Unamortized debt discount |  |  | (414,854 | ) |  |  | (321,377 | )
Unamortized debt issuance costs |  |  | (99,587 | ) |  |  | (77,147 | )
Debt, net |  | $ | 19,485,559 |  |  | $ | 19,601,476 |
Total Debt, net |  | $ | 44,679,859 |  |  | $ | 68,969,199 |
Less current portion |  | $ | 7,900,000 |  |  | $ | 42,600,000 |
Non-current debt, net |  | $ | 36,779,859 |  |  | $ | 26,369,199 |
Secured Credit Facility On May 17, 2023, the Company entered into a credit and guarantee agreement (the “Credit Agreement”), by and among CORE Alaska as the borrower, each of the Company, LSA, and Contango Minerals, as guarantors, each of the lenders party thereto from time to time, ING Capital LLC as administrative agent for the lenders, and Macquarie Bank Limited, as collateral agent for the secured parties. The Credit Agreement provides for a senior secured loan facility (the “Facility”) of up to US$70 million, of which $65 million is committed in the form of a term loan facility and $5 million is uncommitted in the form of a liquidity facility. As of December 31, 2024, the Company has drawn $60 million on the term loan facility and has made $7.9 million in principal repayments with a balance of $52.1 million outstanding. On February 18, 2025 the Company amended the Facility to defer $10.6 million of principal repayments and delivery of 15,000 hedged gold ounces into the first half of 2027 (the "New Repayment Schedule") and extend the maturity date of the Facility from December 31, 2026 to June 30, 2027 (See Note 18). Credit Agreement is secured by all the assets and properties of the Company and its subsidiaries, including the Company’s 30% interest in Peak Gold, LLC, but excluding the Company’s equity interests of LSA in respect of the Lucky Shot mine. As a condition precedent to the second borrowing, the Company was required to hedge 124,600 ounces of its attributable gold production from Manh Choh. On August 2, 2023, CORE Alaska entered into a series of hedging agreements with ING and Macquarie for the sale of an aggregate of 124,600 ounces of gold at a weighted average price of $2,025 per ounce, which satisfied the condition of the second borrowing. The hedge agreements have delivery obligations beginning in July 2024 and ending in June 2027. The Company delivered 37,861 ounces of gold into the hedging agreements as of December 31, 2024. See Note 15 - Derivatives and Hedging Activities. Term loans, which can be made quarterly are to be used only to finance cash calls to the Peak Gold JV, fund the debt service reserve account, pay corporate costs in accordance with budget and base case financial model and fees and expenses in connection with the loan. Loans under the Facility can be Base Rate loans at the Base Rate plus the Applicable Margin or Secured Overnight Financing Rate (“SOFR”) loans at the three month adjusted term SOFR plus the Applicable Margin. The type of loan is requested by the borrower at the time of the borrowing and the type loan may be converted. The “Base Rate” is the highest of Prime Rate, Federal Funds Rate plus 0.50% or Adjusted Term SOFR for one month plus 1%. “Adjusted Term SOFR” is Term SOFR plus a SOFR Adjustment of 0.15% per annum. “Term SOFR” is the secured overnight financing rate as administered by the Term SOFR Administrator. The “Applicable Margin” is (i) 6.00% per annum prior to the completion date for the Manh Choh Project and (ii) 5.00% per annum thereafter, which will be payable quarterly. Interest is payable commencing on the date of each loan and ending on the next payment date. The interest payment dates prior to November 1, 2025 are the last day of July, October, January and April; thereafter the payment dates are the last day of March, June, September and December. The Company also will pay commitment fee on average daily unused borrowings equal to a rate of 40% of the Applicable Margin. The commitment fee is payable in arrears on each interest payment date with the final on the commitment termination date, which is 18 months after the closing date of May 17, 2023. As of December 31, 2024, the Company had no unused borrowing commitments. Borrowings under the term loan facility carried an original issue discount of $2.3 million and debt issuance costs of approximately $1.6 million. As of December 31, 2024, the unamortized discount and issuance costs were $1.2 million and $1.6 million, respectively and the carrying amount, net of the unamortized discount and issuance costs was $49.4 million. As of December 31, 2023, the unamortized discount and issuance costs were $2.4 million and $2.4 million, respectively and the carrying amount, net of the unamortized discount and issuance costs was $25.2 million. The fair value of the debt (Level 2) as of December 31, 2024 and December 31, 2023 was $52.1 million and $30.0 million, respectively. For fiscal year ended December 31, 2024 the Company recognized interest expense totaling $9.8 million related to this debt (inclusive of $5.8 million of contractual interest and approximately $4.0 million related to the amortization of the discount and issuance fees).The Company recognized interest expense totaling $1.4 million related to this debt for the six months ended December 31, 2023 (inclusive of approximately $1.1 million of contractual interest, and approximately $0.3 million related to the amortization of the discount and issuance fees). For fiscal year ended June 30, 2023, the Company recognized interest expense totaling $0.2 million related to the term loan facility (inclusive of $145,000 of contractual interest and approximately $17,000 related to the amortization of the discount and issuance fees). The effective interest rate of the term loan facility was 11.06% as of December 31, 2024 and 11.58% as of December 31, 2023. As of December 31, 2024 and December 31, 2023, the effective interest rate for the amortization of the discount and issuance costs was 8.5% and 5.6%, respectively. The Credit Agreement contains representations and warranties and affirmative and negative covenants customary for credit facilities of this type, including limitations on the Company and its subsidiaries with respect to indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of all or substantially all assets, transactions with affiliates and entry into hedging arrangements. The Credit Agreement, as amended also requires the Company to maintain, as of the last day of each fiscal quarter, (i) a historical debt service coverage ratio of no less than 1.30 to 1.00 (not applicable until commercial production has been declared which has not occurred to date), (ii) a projected debt service coverage ratio until the Maturity Date of no less than 1.30 to 1.00; (iii) a loan life coverage ratio until the Maturity Date of no less than 1.40 to 1.00; (iv) a discounted present value cash flow coverage ratio until the Manh Choh gold project termination date of no less than 1.70 to 1.00; and (v) a reserve tail (i.e., gold production) ratio until the Maturity Date of no less than 25%. The Credit Agreement also includes customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company or any of its material subsidiaries being false in any material respect, default under certain other material indebtedness, certain insolvency or receivership events affecting the Company or any of its material subsidiaries, certain ERISA events, material judgments and a change in control, in each case, subject to cure periods and thresholds where customary. The Company is also required to maintain a minimum cash balance of $2 million. As of December 31, 2024, the Company was in compliance with or received a waiver or consent from ING and Macquarie on all of the required debt covenants. The waivers and consents primarily related to the Company's entry into transactions that required conditions to be modified under the Credit Agreement. The waiver in February 2025, extended out principal repayments on the Facility to align with expected cash flows from the Peak Gold JV. As of December 31, 2024, the Company had drawn a total of $60.0 million on the Facility. The Company made a $2.0 million principal repayment in July 2024 and paid a $5.9 million principal repayment in October 2024. The Company is scheduled to repay $42.6 million of principal in 2025 and the remaining $9.6 million of principal through to September 2026. In connection with entering into the Credit Agreement, the Company entered into a mandate lender arrangement fee letter (the “MLA Fee Letter”) with ING and Macquarie (collectively, the “Mandated Parties”) and a production linked arrangement fee letter (the “PLA Fee Letter”) with ING. Pursuant to the MLA Fee Letter, the Company paid the Mandated Parties on the date of the initial disbursement at the initial closing an upfront fee, calculated based on the principal amount of the Facility. Additionally, the Company paid the Mandated Parties an initial disbursement upfront fee, calculated based on the initial disbursement of $10 million. Pursuant to the PLA Fee Letter, the Company will pay ING a production linked arranging fee based on projected total production over the life of the Facility, as well as an agency fee for consideration of acting as administrative agent and collateral agent. Convertible Debenture On April 26, 2022, the Company closed on a $20,000,000 unsecured convertible debenture to Queen’s Road Capital Investment, Ltd. (“QRC”). The Company used the proceeds from the sale of the debenture to fund commitments to the Peak Gold JV, the exploration and development at its Lucky Shot Property, and for general corporate purposes. In connection with the closing of the Credit Agreement, the Company entered into a letter agreement with QRC (the "Letter Agreement") which amended the terms of the convertible debenture. In accordance with the Letter Agreement, QRC acknowledged that the convertible debenture would be subordinate to the loans under the Credit Agreement, and acknowledged that the Company entering into the loans under the Credit Agreement would not constitute a breach of the negative covenants of the convertible debenture. QRC also waived its put right in respect of the debenture that would require Contango to redeem the debenture in whole or in part upon the completion of a secured financing or a change of control. In consideration for QRC entering into the Letter Agreement, the Company agreed to amend the interest rate of the debenture from 8% to 9%. In accordance with the Letter Agreement the interest payment dates were modified to be the last business day of July, October, January, and April, prior to November 1, 2025 and the thereafter the last business day of March, June, September, and December. The maturity date also changed from April 26, 2026 to May 26, 2028. The debenture currently bears interest at 9% per annum, payable quarterly, with 7% paid in cash and 2% paid in shares of common stock issued at the market price at the time of payment based on a 20-day volumetric weighted average price (“VWAP”). The debenture is unsecured. The holder may convert the debenture into common stock at any time at a conversion price of $30.50 per share (equivalent to 655,738 shares), subject to adjustment. The Company may redeem the debenture after the third anniversary of issuance at 105% of par, provided that the market price (based on a 20-day VWAP) of the Company's common stock is at least 130% of the conversion price. In connection with the issuance of the debenture, the Company agreed to pay an establishment fee of 3% of the debenture face amount. In accordance with the investment agreement, QRC elected to receive the establishment fee in shares of common stock valued at $24.82 per share, for a total of 24,174 shares. The establishment fee shares were issued to QRC pursuant to an exemption from registration under Regulation S. QRC entered into an investor rights agreement with the Company in connection with the issuance of the debenture. The investor rights agreement contains provisions that require QRC and its affiliates, while they own 5% or more of our outstanding common stock, to standstill, not to participate in any unsolicited or hostile takeover of the Company, not to tender its shares of common stock unless the Company’s board recommends such tender, to vote its shares of common stock in the manner recommended by the Company’s board to its stockholders, and not to transfer its shares of common stock representing more than 0.5% of outstanding shares without notifying the Company in advance, whereupon the Company will have a right to purchase those shares. The Debenture carried an original issue discount of $0.6 million and debt issuance costs of approximately $0.2 million. As of December 31, 2024 and December 31, 2023, the unamortized discount and issuance costs were $0.4 million and $0.5 million, respectively. The carrying amount of the debt at December 31, 2024 and December 31, 2023, net of the unamortized discount and issuance costs were $19.6 million and $19.5 million, respectively. The fair value of the Debenture (Level 2) as of December 31, 2024 and December 31, 2023 was $20.0 million. The Company recognized interest expense totaling $1.9 million related to this debt for the fiscal year ended December 31, 2024 (inclusive of approximately $1.8 million of contractual interest, and approximately $0.1 million related to the amortization of the discount and issuance fees). The Company recognized interest expense totaling $1.0 million related to this debt for the six month period ended December 31, 2023 (inclusive of approximately $0.9 million of contractual interest, and approximately $0.1 million related to the amortization of the discount and issuance fees). The Company recognized interest expense totaling $1.8 million related to this debt for the fiscal year ended June 30, 2023 (inclusive of approximately $1.6 million of contractual interest, and approximately $0.2 million related to the amortization of the discount and issuance fees). The effective interest rate of the Debenture is the same as the stated interest rate, 9.0%. The effective interest rate for the amortization of the discount and issuance costs as of December 31, 2024 and December 31, 2023 was 0.6% and 0.6%, respectively. The Company reviewed the provisions of the debt agreement to determine if the agreement included any embedded features and concluded that the change of control provisions within the debt agreement met the characteristics of a derivative and required bifurcation and separate accounting. The fair value of the identified derivative was determined to be de minimis at December 31, 2024 and December 31, 2023 as the probability of a change of control was negligible as of those dates. For each subsequent reporting period, the Company will evaluate each potential derivative feature to conclude whether or not they qualify for derivative accounting. Any derivatives identified will be recorded at the applicable fair value as of the end of each reporting period.

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