News Summary
On December 8, 2025, Dolly Varden Silver and Contango ORE, Inc. announced a merger of equals. The new combined entity will be named “Contango Silver & Gold Inc.” and will be positioned as a North American-focused, mid-tier silver and gold producer and developer.
Under the terms of the agreement, Dolly Varden shareholders will receive 0.1652 shares of Contango common stock for each Dolly Varden share held. Post-transaction, existing shareholders of both companies will each own approximately 50% of the new entity on a fully diluted basis.
The new company’s management will be led by Rick Van Nieuwenhuyse (Contango’s current CEO) as CEO and Shawn Khunkhun (Dolly Varden’s current CEO) as President. The board will consist of seven members, with three appointed by each company and a jointly selected Chairman.
The transaction, expected to close in late February or early March 2026, is subject to shareholder, court, and regulatory approvals.
Material Impact
This merger is a transformative, game-changing event for Dolly Varden Silver. The company has successfully executed a strategy of aggressive exploration and land consolidation at its Kitsault Valley Project, consistently delivering high-grade drill results and expanding its resource potential throughout 2025. However, as a pure exploration company, it remained fundamentally high-risk, entirely dependent on capital markets to fund its significant cash burn (C$23.4 million in exploration expenses in the first nine months of 2025).
The merger with Contango ORE directly addresses this core weakness. Contango brings the producing Manh Choh gold mine in Alaska, which generated US$87 million in cash distributions for Contango in the first nine months of 2025. This provides the combined entity with a crucial source of non-dilutive cash flow to fund the advancement of its impressive portfolio of development projects, including Dolly Varden’s Kitsault Valley and Contango’s Lucky Shot and Johnson Tract projects.
This transaction fundamentally de-risks the investment thesis by:
1. Eliminating Financing Overhang: The reliance on dilutive equity raises to fund exploration is significantly reduced.
2. Diversifying Assets: The company evolves from a single-jurisdiction explorer to a multi-asset producer and developer with projects in both British Columbia and Alaska.
3. Strengthening the Balance Sheet: The combined company will have over US$100 million in cash against only US$15 million in debt.
4. Enhancing Market Profile: With a combined market capitalization of approximately US$812 million, the new entity will have greater liquidity and appeal to a broader institutional investor base.
While the strategic rationale is exceptionally strong, risks remain. The All-In Sustaining Cost (AISC) at the Manh Choh mine was reported at US$1,505 per ounce for the first nine months of 2025, which is relatively high and leaves the operation exposed to gold price volatility. Furthermore, all mergers carry significant integration and execution risk.
Despite these risks, the deal is a masterstroke for Dolly Varden. It crystalizes the value created through exploration success and provides a clear, funded path forward for its world-class assets, transforming it from a speculative explorer into a growth-oriented producer.
Catalysts
– Merger Closing: The most critical near-term catalyst is the successful completion of the transaction. Watch for the shareholder votes and court approvals, expected in February 2026, with a final closing targeted for late February or early March 2026.
– Integration Plan: Post-closing, the market will look for a detailed strategic plan from the new management team. This should outline capital allocation priorities between the various Alaskan and British Columbian assets.
– Manh Choh Operations: Updates on production, costs, and cash flow from the Manh Choh mine will be critical, as this is the engine that will fund future growth.
– 2026 Exploration Program: Details on the planned 2026 drill program for the Kitsault Valley Project, which will now be funded by internal cash flow.
Materiality Conclusion
The merger with Contango ORE is a `Material – Game Changer` event. It addresses the primary risk associated with Dolly Varden—its status as a non-producing, cash-burning explorer—by creating a self-funded, diversified precious metals company. This strategic combination provides a clear path to production for its flagship Kitsault Valley project and should command a significant re-rating from the market.
