Fortitude Gold has five high-grade gold properties in Nevada, with strong production already coming from Isabella Pearl mine

• Fortitude fits the bill for investors seeking dividends
• CEO Jason Reid and chairman Bill Conrad previously steered Gold Resource Corporation
• Golden Mile could become Fortitude’s second open-pit heap leach gold mine

What Fortitude Gold does:

Fortitude Gold Corp (OTCQB:FTCO) is a junior gold producer with operations in the goldfields of Nevada, one of the world’s top mining-friendly jurisdictions. It has five high-grade gold properties in Nevada’s Walker Lane Mineral Belt, with the Isabella Pearl mine in current production.

All five properties — Isabella Pearl, Golden Mile, Mina Gold, East Camp Douglas, and County Line — are in a 30-mile radius of one another within Nevada’s prolific Walker Lane Mineral Belt. Fortitude’s business strategy is to grow organically, remain debt-free and distribute substantial dividends.

Fortitude’s flagship 9,000-acre Isabella Pearl mine produced its first gold in April 2019, some 10 months after the firm broke ground on the project. The company’s 2,400-acre County Line property is 14 miles northeast of the Isabella Pearl project.

Meanwhile, Fortitude’s 10,611-acre Golden Mile property was acquired in June 2020 and contains two known zones of mineralization — the Golden Mile and Spring areas. It is located on five patented claims and includes a database of more than 100 historic third-party exploration drill holes.

Additionally, the firm’s 1,200-acre Mina Gold property has the potential to be a future open-pit heap leach gold operation. Lastly, Fortitude’s East Camp Douglas gold property covers 5,600 acres consisting of 289 unpatented claims, and 16 patented claims.  

Fortitude’s Nevada mining unit was established in 2014. In 2020, Fortitude based in Colorado Springs was spun out of Gold Resource Corporation. Fortitude CEO and director Jason Reid previously served as that company’s CEO. Under Reid’s tenure, Gold Resource achieved over a decade of production, generated over $1 billion in revenue, and returned over $116 million in dividends to shareholders.

How is it doing:

It has been a busy spell for Fortitude so far in 2021.

Most recently, on May 12, Fortitude reported its first results as a standalone public company showing sales of $20.7 million and a net profit of $2.4 million in the first quarter from its Nevada gold operations. The revenue came thanks to an increase in production from its Isabella Pearl mine, which produced 11,572 gold equivalent ounces during the three-month period ended March 31, 2021, compared to the 3,814 ounces it produced in the same period in 2020 when it was part of Gold Resource Corp.

Other highlights from the new company’s balance sheet included $7.3 million cash from operating activities and a $35.3 million cash balance. The firm had $55.6 million in working capital. Isabella Pearl continued to be a low-cost operation, producing gold at a cash cost of $534 per ounce after by-product credits. Realized metal prices during the quarter averaged $1,804 per gold ounce. Fortitude said it is maintaining its 2021 outlook, targeting 40,000 ounces of gold production.

Earlier in May, the junior gold producer said it had increased its monthly dividend by 50% to $0.03 per share, or $0.36 annually. The company’s board said the cash dividend increase reflected Fortitude’s ability to generate significant free cash from Isabella Pearl. The company added that it is delivering on strong operational performance, solid production numbers and an increasingly strong financial and cash position.

At Isabell Pearl, Fortitude has locked up 10-kilometers along a mineralized corridor and expects to find additional deposits on-trend. The Scarlet target is on this trend, and has returned some exciting mineralized widths and high-grade gold drill results.

On April 26, Fortitude shared exploration drill results from Scarlet, including 16.76m grading 2.23 g/t gold, and 24.38m grading 1.60 g/t gold. Fortitude said it is “prioritizing Scarlet with its upcoming drill campaign,” looking to delineate enough mineralization to advance the target towards a production decision. It said it also has numerous other targets along the 10-kilometer trend at Isabella Pearl.

Additionally, on April 7, Fortitude shared promising resource delineation drill results from its Golden Mile property in Nevada’s Mineral County. “Drilling over 20 meters of 3.60 grams per tonne gold less than one meter below the surface underscores Golden Mile’s potential to become an open-pit mine,” the company said. Golden Mile could potentially become Fortitude’s second open-pit heap leach gold mine.

Inflection points:

• Delineation of known mineralized areas in Isabell Pearl and turning them into deposits
• Reaching its 40,000-ounce gold target for 2021 (36,000-40,000 gold ounce range)
• Pursuing a production decision on Golden Mile and a second drill campaign

What the boss says:

In a recent interview with Proactive, Fortitude Gold CEO and director Jason Reid said: “We have made the transition from project ramp-up phase to our targeted annual run rate of 40,000 gold ounces per year for 2021. During 2021, we target moving about 7.5 million tonnes, in 2022 about 2.5 million tonnes and in 2023 about 1 million tonnes, while keeping our targeted production rate at 40,000 gold ounces per year.”

He added: “As we move fewer tonnes each year, taking advantage of the high-grade gold, our costs will move lower while production remains strong. This equates to healthy project margins and is expected to enable us to execute on our business plan of organic growth and substantial shareholder dividends.”

Contact the author Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive

Story by ProactiveInvestors