Fortitude Gold - Q3 2024

Transcript

Operator (participant)

Greetings. Welcome to the Fortitude Gold 2024 third quarter conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Jason Reid, CEO of Fortitude Gold. You may begin.

Jason Reid (CEO)

Thank you. Good morning, everyone, and thank you for joining Fortitude Gold Corp's 2024 third quarter conference call. Following my brief comments and associated presentation for those who joined online, we will have a brief Q&A period. Joining me on the call today for the Q&A portion will be Ms. Janet Turner, our Chief Financial Officer. Let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties, as described in our annual report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments.

Forward-looking statements in the earnings release that we issued yesterday, along with the comments on this call, are made only as of today, November 6, 2024, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find a reconciliation of non-GAAP financial measures referred to in our remarks in our Form 10-K filed with the SEC for the year ended December 31, 2023. The third quarter was another good quarter for the company, especially in the context of the ongoing challenges with permitting. We achieved $10.2 million net sales, $30.3 million cash balance, 4,220 gold ounces produced, $41.5 million working capital, $4.8 million mine gross profit, $2.7 million exploration expenditures, $906 total cash costs after byproduct credits per gold ounce sold, and $990 per ounce total all-in sustaining cost, $2.9 million dividends paid, and $2 million gold and silver bullion.

We achieved this while adjusting to the ongoing permit delays and understaffing of the Bureau of Land Management by the Biden and Harris administration. With the federal election results last night and early this morning, my optimism and excitement for Fortitude Gold is now launching back to what it was during the first Trump administration, back when we received our original Isabella Pearl mine permit during Trump's first term. There are numerous reasons I'm excited, but three stand out, with the first being the gold price. Over the last 12 months, it has gone from sub-$2,000 to hitting record highs around $2,700 gold. Second, with one hand tied behind our back from the Biden and Harris administration's slow-walking permits, we are still producing gold at reasonable cost.

Third, we have the best property portfolio in the Walker Lane mineral belt of Nevada, and we are both well-positioned and eager to build additional mines. Last night's election results bring a much brighter future for Fortitude Gold, with a president that has proven in the past to be far more business-friendly. I spoke yesterday with a longtime shareholder of Fortitude Gold. I'll call him Bob G., and we shared in this optimism and excitement for Fortitude under another Trump administration. It's shareholders like Bob who understand the company can only control so much, and permits are in large part driven by agencies overseen by governments, and those agencies and governments really do make a difference in outcomes of businesses. We are now moving back to a pro-business government, and that's terrific for Fortitude shareholders.

Exploration spending for the quarter was $2.7 million, which resulted in great drill results like those released from Scarlet North, including 9.14 meters grading 2.33 grams per ton gold, within 16.76 meters grading 1.58 grams per ton gold. During the quarter, we cut back on exploration drilling to conserve cash and plan to continue to do so until we receive more permits as a means to best adjust to permit delays. We remain in the permit phase of both County Line and Golden Mile, and we are optimistically moving Scarlet North toward that direction as well. Among the new federal administration's many issues it needs to address to turn this country back around and toward prosperity again, we eagerly look forward to it fully funding its U.S. Bureau of Land Management, and we hope to capitalize on that by trying to permit everything we can under the incoming administration.

Imagine any attendees on this call are as sleep-deprived as me today, having watched the election results into the early morning hours and waking early to watch additional results. So let's conclude this Q3 2024 conference call. The quarter was another good quarter, and we look forward to getting back on track with mine permits and toward some semblance of our original business plan, building multiple mines and operating under a business-friendly president. With that, I would like to thank everyone for their continued support and your time today on this conference call. Operator, please open up the lines for a possible Q&A.

Operator (participant)

Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Jason Reid (CEO)

Operator, while we poll for questions, we have a few online questions. The first is from Rex Jones, a shareholder. Could you please talk about current reserves and efforts to extend the life of production in the Nevada region? Thanks, Rex Jones. Rex, thanks for the question. Yes, we have a lot going on as far as increasing reserves. We're still mining the open pit, and we don't know how much is left there in the transitional ore, so that's exciting. We hope there's a lot. We don't know yet, but we're obviously working to extend the Isabella Pearl as much as we can. As far as County Line, that deposit is still open in certain directions, so we hope to increase it there as well. In addition, there's additional targets that have never been drilled at County Line, so we're excited to get to those.

Let me switch gears here to what I think will happen after County Line is. I think we'll slip in ultimately Scarlet North. Scarlet North is just 800 meters away from Isabella Pearl, and it has surface and near-surface gold, and we've already identified a couple of pods of mineralization, which is very exciting, so we're moving forward to look at how quickly we could get that into production as well. What seems to be our biggest bottleneck is the permits. So, for instance, exploration permits. We need to do a lot of exploration to add to these reserves. This past Biden-Harris administration, not being fully staffed, it made it very difficult to get any kind of permits, including exploration permits.

So, obviously, with the change of presidency, we look forward to once he's got a lot of work to do, but once he gets around to hopefully fully staffing the BLM, that we can get some more permits in the queue and have some additional exploration to add to those. But we have the best property portfolio in the Walker Lane, hands down. We picked up all these properties, as many of you know, back in the bear market. Nobody was looking. Now the big dogs are in our neighborhood, in our backyard, but we don't care because we have the best property.

So we fully intend to be producing here from a very long time, but what we need is permits, and I think we just got the sign on the door, so to speak, from the new administration that's coming in, which is exciting, and I think we'll start getting, once he gets his feet under them, we'll start getting those. So thanks for the question. My next question is Dave Nickerson. Have you considered listing on the American or other stock exchange? Dave, thanks for the question. Yeah. When and if we uplist, it will be to the New York Stock Exchange. Highly unlikely the Nasdaq, but we've done this before going to the New York. We know the guys over there, and yeah, when it's time. What I do think is you want to have is a large catalyst.

I've watched some mining companies uplist, and it didn't do anything for their stock at all, and it costs a lot, takes more time and money and effort and all that, and right now we just need to stay focused. But someday, if and when we were to uplist, it would be to the New York. Let's see. We got another question from Peter, PO. Does this mean that the dividend is secure for 2025? Peter, I sure hope so. I can't give any guarantees on a dividend. We never do. As we state, we target to return as much back to the shareholders in cash dividends as we can while also managing the needs of the business, growing the business, paying taxes, etc. So I will never say guarantees a dividend, but our track record speaks for itself.

And if we can pay a dividend, I think our shareholders believe we will. Thanks for the question. The next question is from Harvey Bolen. Any news on County Line permits? No, Harvey. I cannot underscore how awful the Biden and Harris administration has been. I could go on for hours telling you stories about how difficult it is working under this administration. That is why, in the 10-K and the 10-Qs, we put the Biden-Harris administration as the first and, I believe, second top risk factor. So no, there's very little movement there, but I think things are going to change, and this is a good day for, I believe, the country and the company. Thanks for the question. Mark Smith, thanks for owning ounces of gold on the balance sheet. Are those marked to market, or are they held on balance sheet cost? Good question, Mark. Thank you.

Janet, I'm going to turn this one over to you to make sure I don't misstate that.

Janet Turner (CFO)

Hi. This is Janet Turner. Thank you for the question. Those ounces of gold, those are held at fair market value, so we do mark those to market on a quarterly basis.

Jason Reid (CEO)

Perfect. That's what I thought.

Janet Turner (CFO)

I'll include that in one of the footnotes. Let me pull that footnote up so I don't misspeak and tell you the wrong footnote number. But that footnote is footnote three, where you can see how many ounces we have and the price per ounce that's generating that for the amount that we hold on our balance sheet.

Jason Reid (CEO)

Perfect. Thank you, Janet. And thanks for the question. Another question is from Stefan Banker. Along the same lines as Peter's question, the stock is yielding 9%+. Interest rates are coming down. Can you do more to publicize the story? Yeah. We continue to tell the story, but in the end of the day, we're just going to keep focused on building mines, and that's the biggest thing. And I think the shareholders will come, especially when we get these permits and get back to, again, like I mentioned on the conference call, the semblance to what our original business plan was before it got derailed with the Biden-Harris administration, and that is to build mine on mine on mine, and we're in position to do that. But you have to have permits to do that.

So yeah, I think we'll continue to tell the story, but it's been a pretty hated space, Stefan, generally speaking. Gold hitting new all-time highs and the miners struggling as far as that goes. Some have taken off, but very few. So that's typical for the space. They often lag, but yeah, I think we're in for some good times going forward, but thanks for that. We have some more write-in, but Operator, are there any calls on the line? And we'll go to those first.

Operator (participant)

There are no questions in queue. I would like to remind everyone.

Jason Reid (CEO)

Okay.

Operator (participant)

If you would like to ask a question, please press star one.

Jason Reid (CEO)

Perfect. We'll go back to the write-in questions from Mark Smith. If Biden-Harris is the second biggest risk, what is your highest risk? Good question, Mark. We'll have to revisit our Qs and Ks. Just the X factor on how quick we can get those permits. If we can get permits, our destiny is in our own hands. And again, that's why it's such a great day for me, I think for all shareholders. Our lives are going to change dramatically, and that's not speculation. They were so much better under the first Trump administration. He was talking about fast-tracking permits, and that's the music to my ears. Let's hope he not only fully staffs the BLM, but talks about fast-tracking permits again. So yeah, we'll have to revisit that as far as risk factors. Next question is John McDonald. Been with you since rollout.

You and the cadre don't get enough props for an outstanding job. You're doing best wishes. Hey, John, thank you very much. Love that comment. Yeah, listen, it's been a tough slog. Again, I could go on for hours how difficult it has been working under an anti-business administration. The country felt it. Individuals feel it in their pocketbooks. Businesses feel it, and thankfully, most of the American people spoke up, and now we're going to turn things around, and I'm just excited. Let's get this train back on the main track that we originally planned it to be. It's a great day. With that, let's close the call. I know everybody wants to watch the news. I want to get back to watching the news, and let's close it out, and thank you very much for your time, and we look forward to updating you next quarter. Thank you.

Operator (participant)

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.