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Fortitude Gold Reports 2021 Record Gold Production, $0.75 Net Income Per Share and $40 Million Cash

COLORADO SPRINGS – March 1, 2022 - Fortitude Gold Corporation (OTCQB: FTCO) (the “Company”) today reported its year-end 2021 results including record gold production, net income of $17.9 million, or $0.75 per share, and a strong balance sheet including $40 million cash and no debt.  The Company confirmed both its previously announced 2021 annual production of 46,459 gold ounces, which exceeded the initial 2021 gold production target by 16%, and its 2022 Production Outlook targeting 40,000 ounces of gold (a range of 36,000 to 40,000 ounces).  The Production Outlook assumes no disruptions from the COVID-19 global pandemic or unforeseen operational challenges.  The Company also filed its year-end 2021 S-K 1300 Technical Report Summary of Isabella Pearl Mine Reserves and Resources.  In addition to the updated Reserves and Resources, the Company disclosed an estimated 30,755 recoverable gold ounces on the heap leach pad at December 31, 2021.  Reconciliation of ore tonnes mined to date has shown higher grades of gold in the Isabella Pearl Mine compared to the reserve model which has resulted in an increased mine life now of over 3 years at the current 40,000 annual gold ounce run rate.  The Company is also aggressively moving its Golden Mile property forward towards a development decision that could extend the Company’s gold production an additional 3 1/3 years for a combined 7-year mine life through 2028.  Fortitude Gold is a gold producer, developer, and explorer with operations in Nevada, U.S.A. offering investors exposure to both gold production and dividend yield.

2021 ANNUAL HIGHLIGHTS

“Management of Fortitude Gold delivered strong operational results beating our increased annual gold outlook with record production, delivered strong financial results increasing cash to $40 million and delivered strong shareholder value distributing monthly dividends and outperforming our market peers,” stated Fortitude Gold CEO and President, Mr. Jason Reid.  “The Company exceeded its initial 2021 gold production guidance by 16% while boosting year-over-year gold production by more than 56%.  Operations delivered over 46,000 gold ounces a low all-in sustaining cost of $705 per ounce.  With $82.1 million in net sales, $17.9 million in net income, and a cash balance increase of $12.2 million to $40 million, the Company is in a very strong financial position with no debt.  In April we initiated a monthly dividend and subsequently increased the dividend twice to its current $0.48 per share paid monthly at $0.04 per share.  Our Isabella Pearl open pit mine overperformed with a mined average gold grade of 3.76 grams per tonne gold.”

Mr. Reid stated, “In January of 2021 we estimated the Isabella Pearl Mine would be depleted by mid-2024; however, between the higher grades coming from the tonnes mine to date, the updated Reserve and Resources, and 30,755 gold ounces awaiting recovery on the heap leach pad, we have extended our mine life estimate at the current run rate of 40,000 gold ounces beyond the end of full year 2024.  We also target the same production profile and to be able to continue at least the same dividend per share from a second mine at Golden Mile, that we are aggressively moving forwards towards a development decision and eventual production.”

Mr. Reid continued, “For 2022 we have a clear vision of where we are going and expect Fortitude Gold to generate record free cash flow as we transition into the open pit phase two by the second quarter of this year, allowing access to higher grade ore while moving significantly less waste rock.  We also expect to heavily invest in exploration and continue to move our Golden Mile property towards a development decision and construction to be paid for with our strong treasury.  Fortitude Gold remains a unique investment in the precious metal space offering investors exposure to gold production, district scale exploration potential in arguably the premier mining jurisdictions in the world, Nevada, U.S.A., and a very attractive dividend yield, currently at over 7.5%.  During 2021, we transcended being just a gold equity, separating Fortitude from our peers in the junior gold space, by providing our shareholders a substantial yield and attractive monthly dividend income.”

2021 Overview

For the year ended December 31, 2021, the Company sold 45,891 gold ounces at a total cash cost of $587 per gold ounce, and a realized 2021 average sales price for gold of $1,795 per ounce.  The Company recorded revenues of $82.1 million, and net income of $17.9 million, or $0.75 per share.

The calculation of our cash cost per ounce contained in this press release is a non-GAAP financial measure. Please see "Management's Discussion and Analysis and Results of Operations" contained in the Company’s recently filed Form 10-K for a complete discussion and reconciliation of the non-GAAP measures.

The following Production Statistics table summarize certain information about our operations for the years ended December 31, 2021 and 2020:

         
            
    Year ended December 31, 
       2021      2020
Ore mined          
Ore (tonnes)    598,345    643,518
Gold grade (g/t)    3.76    2.42
Low-grade stockpile          
Ore (tonnes)    8,600    160,739
Gold grade (g/t)    0.33    0.52
Pre-strip waste    —    1,346,316
Waste (tonnes)    7,159,740    4,930,262
Metal production (before payable metal deductions)(1)          
Gold (ozs.)    46,459    29,479
Silver (ozs.)    44,553    28,359
  1. The difference between what we report as “metal production” and “metal sold” is attributable to the difference between the quantities of metals contained in the doré we produce versus the portion of those metals actually paid for according to the terms of our sales contracts. Differences can also arise from inventory changes incidental to shipping schedules, or variances in ore grades and recoveries which impact the amount of metals contained in doré produced and sold.

The following Sales Statistics table summarizes certain information about our operations for years ended December 31, 2021 and 2020:

             
                
    Year ended December 31, 
       2021      2020
Metal sold              
Gold (ozs.)      45,891      29,929
Silver (ozs.)      43,189      29,129
Average metal prices realized (1)              
Gold ($per oz.)      1,795      1,813
Silver ($per oz.)      24.74      21.12
Precious metal gold equivalent ounces sold            
Gold Ounces      45,891      29,929
Gold Equivalent Ounces from Silver      595      339
       46,486      30,268
             
Total cash cost before by-product credits per gold ounce sold   $  610   $  949
Total cash cost after by-product credits per gold ounce sold   $  587   $  928
Total all-in sustaining cost per gold ounce sold   $  705   $  952
  1. Average metal prices realized vary from the market metal prices due to final settlement adjustments from our provisional invoices when they are settled. Our average metal prices realized will therefore differ from the market average metal prices in most cases.

Year-End 2021 S-K 1300 Technical Report Summary

The Company filed its 2021 year-end S-K Technical Report Summary pursuant to Item 1300 of SEC Regulation S-K for the Isabella Pearl mine.  Year-end 2021 proven and probable reserves at the Isabella Pearl Mine totaled 908,800 tonnes grading 3.75 grams per tonne (g/t) gold, or 109,700 gold ounces.  In addition, the Company reported high-grade stockpile reserves of 14,000 tonnes grading 10.09 g/t gold and low-grade stockpile reserves of 435,000 tonnes grading 0.53 g/t gold. 

As of December 31, 2021, our estimate of Proven and Probable (“P&P”) reserves, all of which pertain to the Isabella Pearl Mine, were:

                             
                Precious           Precious
                Metal           Metal
                Gold            Gold 
        Gold   Silver    Equivalent   Gold   Silver    Equivalent
Description      Tonnes      g/t      g/t          g/t      Ounces      Ounces      Ounces
Isabella Pearl Mine                                                        
Proven    483,300    5.26    47    5.89    81,800    733,100    91,600
Probable    425,500    2.04    16    2.26    27,900    221,000    30,900
Proven and Probable Total    908,800    3.75    33    4.19    109,700    954,100    122,500
High-Grade Stockpile    14,000    10.09    88    11.26    4,500    39,600    5,000
Low-Grade Stockpile    435,000    0.53    5    0.59    7,300    63,900    8,200
Isabella Pearl Mine Total    1,357,800    2.78    24    3.11    121,500    1,057,600    135,700

Notes to the 2021 P&P reserves:

  1. Metal prices used for P&P reserves were $1,738 per ounce of gold and $23.22 per ounce of silver. These prices reflect the consensus 2022-2024 average prices for gold and silver (CIBC Global Mining Group, Analyst Consensus Commodity Price Forecasts, November 30, 2021).
  2. Precious metal gold equivalent is 74.85:1 determined by taking gold ounces produced or sold, plus silver ounces produced or sold converted to precious metal gold equivalent ounces using the gold to silver average price ratio for the period.
  3. For the Isabella Pearl Mine, the quantities of material within the designed pits were calculated using a cutoff grade of 0.33 Au g/t.
  4. Mining, processing, energy, administrative and smelting/refining costs were based on 2021 actual costs for the Isabella Pearl Mine.
  5. Metallurgical gold recovery assumptions used for the Isabella Pearl Mine were 81% for all ore which is currently being crushed. These recoveries reflect predicted average recoveries from metallurgical test programs.
  6. Isabella Pearl P&P reserves are diluted and factored for expected mining recovery.
  7. Figures in tables are rounded to reflect estimate precision and small differences generated by rounding are not material estimates.

The new SEC S-K Technical Report Summary now allows for disclosure of mineral resource estimates (exclusive of mineral reserves).  Year-end 2021 mineral resource estimates for the Isabella Pearl mine totaled 446,600 tonnes grading 1.26 g/t gold, or 18,100 gold ounces in the oxide measured and indicated category, and 259,400 tonnes grading 1.30 g/t gold, or 10,900 gold ounces in the oxide inferred category.

As of December 31, 2021, our Mineral Resource estimate (exclusive of Mineral Reserves), all of which pertain to the Isabella Pearl Mine, were:

                             
                   Precious           Precious
                Metal           Metal
                Gold            Gold 
        Gold   Silver    Equivalent   Gold   Silver    Equivalent
Description      Tonnes      g/t      g/t          g/t      Ounces      Ounces      Ounces
Measured and Indicated Resources                            
Isabella Pearl Mine                                                        
Oxide                            
Measured    89,000    2.38    55    3.11    6,800    157,600    8,900
Indicated    357,600    0.99    9    1.10    11,300    96,200    12,600
Measured and Indicated Oxide Total    446,600    1.26    18    1.50    18,100    253,800    21,500
Sulfide                            
Measured    110,600    4.98    57    3.11    17,700    180,100    20,100
Indicated    40,800    3.79    48    1.10    5,000    62,700    5,800
Measured and Indicated Sulfide Total    151,400    4.66    50    5.32    22,700    242,800    25,900
Isabella Pearl Mine Measured and Indicated Total    598,000    2.12    26    2.47    40,800    496,600    47,400
Inferred Resources                                                        
Isabella Pearl Mine                            
Oxide Inferred    259,400    1.30    12    1.46    10,900    102,800    12,300
Sulfide Inferred    28,800    3.77    56    4.52    3,500    51,600    4,200
Isabella Pearl Mine Inferred Total    288,200    1.55    17    1.78    14,400    154,400    16,500

Notes to the 2021 Mineral Resources:

  1. Reported at cutoffs of 0.33 g/t Au for Isabella Pearl Mine Oxide and 2.0 g/t Au for Isabella Pearl Mine Sulfide.
  2. Whole block diluted estimates are reported within an optimized pit shell.
  3. Mineral Resources do not have demonstrated economic viability.
  4. Totals may not sum exactly due to rounding.
  5. Mineral resources reported are exclusive of mineral reserves.

The Company also disclosed in the S-K 1300 Technical Report Summary that in addition to the reserves, resources and various ore stockpiles, it estimates the eventual recovery of 30,755 gold ounces from crushed ore already placed on the heap leach pad.

The Qualified Persons (“QP”) who prepared this report are specialists in the fields of geology, exploration, and Mineral Resources and Reserves estimation and classification. The following individuals, by virtue of their education, experience and professional association, are considered QPs for this report and are members in good standing of appropriate professional institutions. The QPs are consultants, independent of FGC. The qualified persons who prepared this report are Donald E. Hulse, P.E., SME-RM, Christopher Emanuel, SME-RM, and Ian H. Crundwell, P. Geo.

The Year-End 2021 S-K 1300 Technical Report Summary will be available on the Company’s website in the near future.

Projects Update

Fortitude Gold successfully ramped up gold production to targeted levels at its Isabella Pearl Mine in 2021.  The Company is targeting 40,000 ounces of gold (a range of 36,000 to 40,000 gold ounces) during the 2022 production year, assuming no disruptions from the COVID-19 global pandemic or unforeseen operational challenges.

In July 2021, the Company received permits to expand the Isabella Pearl heap leach pad and pad construction was completed in December 2021.  The expanded heap leach pad can now accommodate additional ore reserve tonnes defined during exploration drill campaigns in 2019 and 2020.  The newly permitted area for pad expansion is larger than the recently completed phase two expansion heap leach pad, so the Company may expand the pad further in the future if needed under the existing permits. The Company began placing ore on the new heap leach pad in February 2022.

The Company began the permitting process in 2021 to connect the Isabella Pearl Mine to the electrical power grid, a shift that is expected to reduce energy costs by approximately $80,000 per month once complete.  The capital cost to switch from diesel power generation to the electric grid is budgeted at approximately $1.6 million and is expected to be completed in 2022, subject to NV Energy timeframes.

In November 2021, the Company announced its maiden resource estimate for its Golden Mile Property in Mineral County, Nevada.  The Company’s Initial Assessment Technical Report Summary on Golden Mile estimates in-situ ounces consisting of 78,500 Indicated gold ounces at 1.13 g/t and 84,500 Inferred gold ounces at 1.10 g/t.  The mineralization at Golden Mile remains open along strike and at depth, and the current resource is confined solely to patented claims.  Company management is moving towards a development decision and eventual production based on this initial project resource and is currently finalizing estimates for project capital expenditures, sustaining project capital, as well as overall project economics.  In January of 2022 the Company filed its Plan of Operations with the Bureau of Land Management, the first step in permitting the Golden Mile project.  The Company targets an official board level development decision for Golden Mile in the first half of 2022 based off the project’s initial resource.

Exploration Program

The 2021 exploration drill programs focused on targets along the Isabella Pearl Mineralized trend, completed its initial drill campaign on its East Camp Douglas property and delineated an initial resource at Golden Mile. During 2021, the Company acquired 100% interest in a prospective property in west central Nevada called Ripper.  Ripper has high-grade gold surface samples in a favorable geologic setting for a potential open pit heap leach operation. Ripper becomes the sixth property in the Company’s portfolio. In 2022, the Company anticipates spending approximately $5.7 million for exploration activities at its Nevada Mining Unit.  Exploration expenses may be modified depending on drill rig and crew availability, exploration results, metal market conditions and available capital.  The primary focus in 2022 for exploration drill programs include testing targets along the mineralized trend and structural corridor where our Isabella Pearl mine is located, planned delineation and expansion drilling of the known mineralized zones at Golden Mile and exploration drilling at our County Line and East Camp Douglas properties.


 

See Accompanying Tables

The following information summarizes the results of operations for Fortitude Gold Corporation for the years ended December 31, 2021 and 2020, its financial condition at December 31, 2021 and 2020, and its cash flows for the years ended December 31, 2021 and 2020. The summary data as of December 31, 2021 and 2020 and for the years ended December 31, 2021 and 2020 is derived from its audited financial statements contained in its annual report on Form 10-K for the year ended December 31, 2021, but do not include the footnotes and other information that is included in the complete financial statements. Readers are urged to review the Company’s Form 10-K in its entirety, which can be found on the SEC's website at www.sec.gov.

The calculation of its cash cost before by-product credits per gold ounce sold, total cash cost after by-product credits per gold ounce sold and total all-in sustaining cost per gold ounce sold contained in this press release are non-GAAP financial measures. Please see "Management's Discussion and Analysis and Results of Operations" contained in the Company’s most recent Form 10-K for a complete discussion and reconciliation of the non-GAAP measures.

 

FORTITUDE GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share amounts)

             
    December 31,    December 31, 
       2021      2020
            
ASSETS              
Current assets:              
Cash and cash equivalents   $  40,017   $  27,774
Accounts receivable      238      145
Inventories      37,550      23,051
Prepaid  taxes      1,289      —
Prepaid expenses and other current assets      2,228      1,962
Total current assets      81,322      52,932
Property, plant and mine development, net      37,226      50,990
Operating lease assets, net      463      6,198
Deferred tax assets      509      959
Other non-current assets      2,909      1,946
Total assets   $  122,429   $  113,025
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current liabilities:              
Accounts payable   $  2,127   $  1,715
Loans payable, current      87      665
Finance lease liabilities, current      23      398
Operating lease liabilities, current      463      6,198
Mining taxes payable      1,699      1,001
Other current liabilities      912      1,092
Total current liabilities      5,311      11,069
Asset retirement obligations      4,725      3,844
Loans payable, long-term      30      117
Finance lease liabilities, long-term      15      27
Total liabilities      10,081      15,057
Shareholders' equity:              
Preferred stock - $0.01 par value, 20,000,000 shares authorized and nil outstanding at December 31, 2021 and nil shares authorized and outstanding at December 31, 2020      —      —
Common stock - $0.01 par value, 200,000,000 shares authorized and 23,961,208 shares outstanding at December 31, 2021 and 21,211,208 shares outstanding at December 31, 2020      240      212
Additional paid-in capital      103,476      99,682
Retained earnings (accumulated deficit)      8,632      (1,926)
Total shareholders' equity      112,348      97,968
Total liabilities and shareholders' equity   $  122,429   $  113,025
 

FORTITUDE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31, 2021 and 2020
(U.S. dollars in thousands, except share and per share amounts)

               
    Year ended  
    December 31,   
       2021      2020  
Sales, net   $  82,109   $  53,967  
Mine cost of sales:                
Production costs      26,661      27,495  
Depreciation and amortization      14,728      10,241  
Reclamation and remediation      156      48  
Total mine cost of sales      41,545      37,784  
Mine gross profit      40,564      16,183  
Costs and expenses:                
General and administrative expenses      11,443      2,882  
Exploration expenses      5,396      2,648  
Other expense, net      190      233  
Total costs and expenses      17,029      5,763  
Income before income and mining taxes      23,535      10,420  
Mining and income tax expense      5,669      203  
Net income   $  17,866   $  10,217  
Net income per common share:                
Basic   $  0.75   $  0.48  
Diluted   $  0.74   $  0.48  
Weighted average shares outstanding:                
Basic      23,875,631      21,211,208  
Diluted      24,108,365      21,211,208  
 

FORTITUDE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2021 and 2020
(U.S. dollars in thousands)

             
    Year ended
    December 31, 
       2021      2020
Cash flows from operating activities:              
Net income   $  17,866   $  10,217
Adjustments to reconcile net income to net cash from operating activities:              
Depreciation and amortization      14,859      10,377
Stock-based compensation      3,405      —
Deferred taxes      450      (959)
Reclamation and remediation accretion      156      48
Other operating adjustments      (303)      —
Changes in operating assets and liabilities:              
Accounts receivable      (93)      (145)
Inventories      (10,866)      (2,300)
Prepaid expenses and other current assets      (266)      (1,643)
Other non-current assets      19      (2,085)
Accounts payable and other accrued liabilities      29      (1,508)
Income and mining taxes payable      (591)      1,001
Net cash provided by operating activities      24,665      13,003
             
Cash flows from investing activities:              
Capital expenditures      (4,546)      (6,488)
Net cash used in investing activities      (4,546)      (6,488)
             
Cash flows from financing activities:              
Contributions from GRC      —      21,711
Dividends paid      (7,308)      —
Issuance of common stock      500      —
Repayment of loans payable      (665)      (879)
Repayment of capital leases      (403)      (439)
Net cash (used in) provided by financing activities      (7,876)      20,393
             
Net increase in cash and cash equivalents      12,243      26,908
Cash and cash equivalents at beginning of period      27,774      866
Cash and cash equivalents at end of period   $  40,017   $  27,774
             
Supplemental Cash Flow Information              
Interest expense paid   $  26   $  86
Income and mining taxes paid   $  5,893   $  —
Non-cash investing and financing activities:              
Change in capital expenditures in accounts payable   $  503   $  (1,544)
Change in estimate for asset retirement costs   $  794   $  1,159
Stock contributed from Parent   $  —   $  100
Equipment purchased under finance lease   $  16   $  —
Right-of-Use assets acquired through operating lease   $  1,820   $  7,265
 

About Fortitude Gold Corporation

Fortitude Gold is a U.S. based gold producer targeting projects with low operating costs, high margins, and strong returns on capital. The Company’s strategy is to grow organically, remain debt-free and distribute substantial dividends. The Company’s Nevada Mining Unit consists of five high-grade gold properties located in the Walker Lane Mineral Belt and a sixth high-grade gold property in west central Nevada. The Isabella Pearl gold mine, located on the Isabella Pearl mineralized trend, is currently in production. Nevada, U.S.A. is among the world’s premier mining friendly jurisdictions.

Cautionary Statements:  This press release contains forward-looking statements that involve risks and uncertainties. If you are risk-averse you should NOT buy shares in Fortitude Gold Corp.  The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this press release, the words “plan”, “target”, "anticipate," "believe," "estimate," "intend" and "expect" and similar expressions are intended to identify such forward-looking statements.  Such forward-looking statements include, without limitation, the statements regarding the Company’s strategy, future plans for production, future expenses and costs, future liquidity and capital resources, and estimates of mineralized material are forward-looking statements.  All forward-looking statements in this press release are based upon information available to the Company on the date of this press release, and the Company assumes no obligation to update any such forward-looking statements.

Forward looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate.  The Company's actual results could differ materially from those discussed in this press release.  In particular, the scope, duration, and impact of the COVID-19 pandemic on mining operations, Company employees, and supply chains as well as the scope, duration and impact of government action aimed at mitigating the pandemic may cause future actual results to differ materially from those expressed or implied by any forward-looking statements.  Also, there can be no assurance that production will continue at any specific rate.

Contact:
Greg Patterson
719-717-9825
greg.patterson@fortitudegold.com
www.Fortitudegold.com

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