Fortitude Gold (OTCMKTS:FTCO) reported third-quarter net income of $2 million and gold production of 2,139 ounces, while management said it was prioritizing permits for its Golden Mile and East Camp Douglas projects as it works to increase production.
The company posted net sales of $10.3 million and earnings of $0.07 per share for the quarter. It ended September with $8.5 million in cash, $27.3 million in working capital and 611 ounces of gold rounds and bullion. Fortitude Gold paid $0.9 million in dividends during the period.
CEO Jason Reid declined to forecast fourth-quarter or 2027 production, citing variables including new mines coming online and the depletion of Isabella Pearl. He said the company’s goal was to increase production over time, but quarterly output would vary.
Mining Costs and Production
Fortitude Gold is extracting material from Scarlet South and County Line while mining the remaining oxide material at Isabella Pearl Deep. County Line contributed 1,075 ounces during the third quarter, according to a shareholder question addressed on the call.
Reid said County Line production depends partly on the mix of lower-grade material from the East pit and higher-grade material from the main pit. The main pit layback will take considerable time, he said, and there will be a period when mining is focused on the lower-grade East pit.
Third-quarter total cash costs after byproduct credits were $1,682 per ounce sold at Isabella Pearl and $1,930 at County Line. All-in sustaining costs were $2,882 per ounce at Isabella Pearl and $1,985 at County Line.
Reid attributed Isabella Pearl’s cost variability in part to waste removal associated with mining Pearl Deep and to the number of ounces produced. He declined to forecast future per-ounce costs.
Chief Financial Officer Janet Turner said ore from County Line and Isabella Pearl is combined on the heap leach pad. The company allocates production between the mines monthly on a pro rata basis using assumptions about the ore placed on the pad and its leaching characteristics, she said. Turner also noted that a shipment of slag and carbon fines sold during the quarter was entirely attributable to Isabella Pearl, affecting its reported costs.
Permitting and Exploration
Reid said Golden Mile could soon enter the National Environmental Policy Act, or NEPA, review phase, which he described as a roughly six-month process. Fortitude Gold intends to build the mine in 2027, subject to receiving permission, although Reid did not give an exact development timetable.
Golden Mile is expected to take priority over Scarlet North as the company’s next mine permitting target. Reid said Scarlet North analysis indicates that additional drilling and water-table review will likely be needed in the future.
At East Camp Douglas, Reid said an exploration environmental assessment permit was nearing the end of its NEPA review. The permit would allow exploration across 150 acres, compared with 10 acres currently available under two legacy permits. Reid estimated the decision could be weeks away but said he did not know the precise timing.
Third-quarter drill results at East Camp Douglas included intercepts of 13.72 meters grading 3.58 grams of gold per ton, 28.96 meters grading 2.07 grams per ton, and 21 meters grading 1.43 grams per ton. Reid said the results came from three separate areas in the north of the district.
The company had about four drill rigs and was seeking to secure as many as seven for East Camp Douglas once the permit is in hand, Reid said. The project is a joint venture with Hawthorne. Reid said East Camp accounted for approximately $2.6 million of the company’s $3.9 million in third-quarter exploration spending.
Funding and Operating Plans
Asked about negative operating cash flow in the first nine months and the possibility of equity financing, Reid said financing is always possible but that the company remains focused on maintaining a tight capital structure. He said internally funding development and exploration would be the goal, while adding that the company would have to see how conditions develop. Continuing dividends is also a goal, he said, though maintaining them has been difficult.
Reid said connecting Isabella Pearl to the power grid is saving an estimated $70,000 to $100,000 a month, although the diesel-powered mining fleet remains exposed to fuel prices. An expansion of the Isabella Pearl heap leach pad is underway and, once complete, would increase leach capacity and extend the life of the processing operation, he said.
For Golden Mile, Fortitude Gold plans to process ore at the site and transport gold-bearing carbon back to its existing facility rather than haul ore over the longer distance. Reid said the company has already purchased much of the processing equipment, but will need another crusher because the one originally bought for Golden Mile is now being used at Isabella Pearl.
About Fortitude Gold (OTCMKTS:FTCO)
Fortitude Gold is a U.S.-based gold and silver company focused on mining, exploration and development in Nevada’s Walker Lane mineral belt. The company produces gold and silver doré and has centered its operations on the Isabella Pearl open-pit, heap-leach mine in Mineral County. Fortitude Gold became an independent company in 2021 after being spun off from Gold Resource Corporation. Alongside Isabella Pearl, it holds other Nevada properties for exploration and potential development. Jason Reid has served as Fortitude Gold’s president and chief executive officer.
