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spk00: Good day and welcome to the Fortitude Gold first quarter 2023 conference call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to CEO and President Jason Reed. The floor is yours.
spk01: Thank you. Good morning, everyone, and thank you for joining Fortitude Gold Corp's 2023 first quarter conference call. Following my comments and associated presentation for those who joined online, we will have a brief question and answer period. Joining me on the call today for the Q&A portion will be Mr. John LaBate, 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, May 9, 2023, 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, 2022. The first quarter was very strong on several fronts, including ounces produced, low production cost, profitability, and increased cash balances. We produced over 11,400 gold ounces at an all-in sustaining cost per ounce sold of $578. We generated net income of 6.4 million, or 26 cents per share, Our mine gross profit was $12.3 million. Net sales were $21.5 million. We distributed $2.9 million in dividends and achieved all of this while adding over $7 million to our treasury. Q1 was a terrific quarter. It was such a success, the board has approved a special dividend to shareholders of $0.04 per share to be paid to shareholders of record on May 22, 2023. and paid on May 31st. This is in addition to our Institute monthly dividend of $0.04 per share. For the quarter, we deployed $3.7 million in exploration and currently have drills turning at County Line, Isabella Pearl, and Golden Mile properties. We plan near-term drilling at East Camp again where we are currently preparing roads and drill pads for an upcoming drill program. Our exciting portfolio properties have no lack of mineralization to expand upon and indications of potential for new discoveries as well. We recently had a kickoff meeting with the Bureau of Land Management and received permission to submit our EA permit application for our county line proposed open pit mine, and we plan to submit that EA shortly. We also scheduled a similar kickoff meeting for Golden Mile and plan to submit that project EA permit application by mid-year. Both County Line and Golden Mile have mineralization open on strike and depth that we are moving forward with obtaining permits for the first year of mining at each of these properties in a staged approach. In addition to more near-term drilling at each camp, our mapping and surface sampling of high-grade gold at our Ripper property warrants a maiden drill program targeted at this point for late 2023. To conclude, Q1 2023 was a terrific quarter. so much so that we are rewarding shareholders with a special dividend and appreciation of your continued support. And we continue to look to the balance of 2023 as being another exceptional year for fellow shareholders afforded to Gold Corporation. We thank you for your continued support. With that, I would like to thank everyone for their time today on this conference call. Operator, if we do have any live Q&A, you can go ahead and take those. I see several written in questions I can start with, if that's more efficient.
spk00: Sure. The floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold just a moment while we poll for questions. Your first question is coming from Daniel Balsuri. Please pose your question. Your line is live.
spk02: Yes. Hi, Jason.
spk01: Hi, Daniel.
spk02: How are you? How are you, sir? I called, I guess, like a few quarters ago. I'd like to, of course, say hello to Greg. I'm sure Greg is in the room. He is? Hey, Greg. I'd like to say hello to him. And, you know, the last time I called, I gave you guys like an A+. Now I have to give you an A+++. I can't. To me, I'm a cheerleader. I think this is a great company. I think you guys are doing a great job. I think the properties, of course, are fantastic. And like you said on your conference call, I also listened to your podcast last week also a couple weeks ago. The emphasis that you guys played on keeping costs low are truly remarkable in this industry. I can't – I've studied this industry, and I can't tell you how important that is. I'm sure you know a lot more than me because I actually – You're much more experienced than I may be. The way you guys, and not only that, I was looking at the report, of course, your grams per ton clearly above and beyond what the normal industry is. Is that correct?
spk01: Yeah, for most open pit heap leachers, correct.
spk02: So you're looking at almost four grams per ton in most of your property, so at least three and a half grams per ton.
spk01: Well, in Isabel Pearl, yes.
spk02: You know, Isabella Pearl. Okay, fine. Now, you're rapidly moving towards getting these other two mines up and running. Correct. Hopefully, with God's speed, it continues. And I, for one, hope to see a real great increase, continuing increase in the dividend. The special dividend was fantastic. Great job for the quarter. And just keep doing what you're doing. That's all I can say. I'm a cheerleader. Thank you so much.
spk01: Daniel, thanks for the call. Thanks for the nice comments. And the next roadshow I go on, I'd like you to come with me. That'd be awesome. So as far as your cost statement, yeah, our costs are really low and one of the lowest in the industry. And in large part, it's the evolution of the Isabella Pearl. We've removed most of the waste. So our costs could be here even potentially lower. going forward at the Isabella Pro, which is nice, but the long and short of it is great, drives a lot, and drives everything, and we're fortunate with all our properties. The other thing on the dividends, we could institute that dividend, that special dividend, and increase that and bring that into the fold as the annual dividend. We could do that right now with no problem, but we are not doing that because we have two mines to build, and we want to make sure that we do this with our own cash flow, and Treasury and not dilute shareholders so that we can continue to pay a dividend and pay a substantial dividend. So, again, just to kind of expand upon some of those points you made, but I really appreciate your call, Daniel. Thank you very much.
spk00: There are no questions from the line at this time.
spk01: Okay. A lot of writing questions here. From James Strolling, have permits for more production at IP been approved? Thanks for great results. We're working on getting the permit to mine deeper. There's no reason we believe we shouldn't get that. We have plenty of time. They have not been approved yet, but it's in process. So thanks for the question. The next question from Frank Wasco. How are we doing with the power line installation? You know, the power line, Frank, has been a challenge in as much as dealing with large bureaucratic institutions. And that's just taken a lot longer than we would have liked. We have the money to put it in. Unfortunately, it's not something that we can just go do. So we'll be holding to other powers that be, but we still continue to push that project forward to get power. Once we do hook to the power line, that should lower our costs as well. But I can give you no guidance on timing because that is just out of our hands, unfortunately. But thanks for the question. The next question, Harvey Boland. Do you expect to have new mines in operation 2023? Is your guidance based on Isabella Peraloni? Thanks, Harvey. Good to hear from you. No, our guidance is based on Isabella Peraloni. It depends on when the permits drop in. As I mentioned on the call, we got permission to submit our EA for County Line. And we believe that could potentially land in our hands much, much sooner than anything else because we're not building any process at County Line. So I believe that'll be the next mine to come online and then go the mile after that. So all this, to come back to your question, Harvey, is based on Isabella Pearl. Thanks for the question. The next write-in question is Clyde Lagomarsino. I'm sorry if I pronounced your last name incorrectly. Has a permit been submitted to dig deeper into pearl? Yeah, I answered that question. Not yet, but there's no reason why we shouldn't get it. Okay, next one from Mark Smith, East Camp. That litho cap is so large. Could you detail the drill campaign there? Thanks for the question, Mark. Yeah, that litho cap is absolutely huge. For those who don't know, we spent over a year going out in a grid pattern, 100 by 100 grid pattern, and taking surface samples, thousands of them, to help us vector in on numerous targets. It'll take us a while, quite a while, to be drilling all these targets. As many of you know, we went in with our first drill campaign to just understand the stratigraphy, the geology, if you will, and we hit mineral on our first drill campaign and our second drill campaign. So we're really excited about that, but we have a lot of targets to test. So we want to get back there as soon as possible. I think you heard me mention on the call that we're putting things in place to get back there this year and drill, but we're really excited about that litho cap. And again, we're swinging for the fences. That could be a game changer. But let us not forget those high-grade veins of the north that are totally independent of the litho cap. And I'm pushing the team to start drilling those this year as well. It'd be nice if we have a drill up there that bounces back and forth between the two so that we digest information through result assays as they come in and drill the other area and bounce back and forth so that we can expedite that up there. But East Campus is very exciting, as is all our properties. But thanks for the question, Mark. Here's another question. Actually, Mark, you sent a second question to Pearl. I wonder how long this low waste tonnage ratio can last. It will last for the remainder of the Isabella Pearl. Now, it really kind of depends on how much more we can pull from deeper below the permitted pit bottom. But there is a limit to how much we can pull without having to do a major pushback on the pit walls. So we'll see. But the long and short of it is that 7 to 1 ratio of waste to ore has been removed. And most of what we mine is ore now. And that's reflected in our cash costs. That's reflected in our revenue. That's reflected in everything that's going on right now. So, yeah, it will last. Thanks for the question. Gary Simmons is the next question. How much longer does Isabella Pro Production last? We're going to be mining the rest of this year. And we believe we have about over a year on the pad. So we've got a couple more years in front of us. We'll see how much more we can pull out of the bottom, but we're not going to guesstimate a number, so to speak, because when we sent drills in the bottom of the pit just to test, we weren't able to drill extensively just because we have an operating mine. So we're just going to see. Hopefully we add quite a few ounces, but we're just going to have to see. But we've got a couple years ahead of us, which is good, of production from Isabella Pearl, which gives us enough time, we believe, to get county line online. And then between those two, that should give us enough time to get Golden Mile online. So that's our goal. Thanks for the question, Gary. The next question, Gary Hayes, do you have a rough timeline for production at Counterline and Golden Mile? After you receive permits, can you work on both properties at the same time? Yes, we can. As far as Golden Mile, we've purchased almost all equipment and materials, which is great. Locked in the costs. Inflation is still around us. Price is still going up. So I think we did a really good thing in locking those costs in for Golden Mile. County line, we're looking at capexes. It's going to be a small capex. Keep in mind, in county line, we're not building much. We're not building a process facility. We're not building an ADR plant. We're not building a heat bleach. So think of county line as just an extension of the Isabella Pearl processing. And we're hauling more from a satellite area into the Isabella Pearl to extend its production life, as is with Golden Mile. We're going to be pulling gold to a carbon phase and trucking that carbon down. So we're not going to have an ADR to permit a golden mile either. So both, we hope, shorten the time frame of the permitting, with county line probably being as short a time frame as you can possibly do, with golden mile being much less time frame if you were trying to do an ADR. But both, we think, will get in a timely manner from which to bring them in and online for continued use. production. Thanks, Gary, for that question. Let's see. Next question is from Timothy Paul. You indicated county line drill results were exceeding expectations. How would you characterize drilling results from Golden Mile at this time? Golden Mile has some incredible high-grade pockets. There's a lot of vertical dissemination of the gold in the structures, if you will. we're seeing that there's now a horizontal component. And that's why we're drilling it again, doing some infill, because our model is expanded to include this horizontal component. To my way of thinking, that's good to have complicated geology because it's more open spaces for gold to be present, if you will, in the deposit. So gold and mile has some incredible high grade. The challenge there for us is to connect it all. And so that's what we're trying to do. And to be in a timely manner, I don't want to take five years drilling this out, which the typical mining company would do. So what we're doing is just focusing on the first year of production and trying to pull year one into the fold as far as a mine plan goes and move forward from there. So that's what we're doing. But both properties have great grade. And while shareholders are a bit spoiled with Isabella Pearl's grade, I would like anybody, shareholder or potential shareholder, to look at County Line and Golden Mile and look at the grade there and compare it to other deposits in Nevada. Both are exceptional. So, yeah, we're all a little bit spoiled with Isabella Pearl, but it doesn't mean we don't have great other potential projects coming forward. Okay, the next question. Thanks for that, Tim. Next question is from Ray Lieb. Will there be an update resource estimate for Pearl? Probably not, just because just time-wise, I don't believe we need to. We're going to, at the end of this year, mine down to the bottom of the permitted pit, and we expect the additional ability to go deeper with additional permit approval, and then we'll just mine it. And what's happening here is we're going from an oxide into a sulfide, but there's this transition area. And some of the transitional ore you can extract the gold, the cyanide. Other transitional ore, you can't. And then the sulfide, you can't at all. So it gets a little bit complicated, but our team has done a great job at dealing with the sulfide transition in the wall already and at some of the benches. And so we're going to be coming in at full steam to see how much more we can squeeze out of the bottom of the open pit, which is exciting. But no, I wouldn't expect an updated as it relates to trying to quantify the deeper mineralization, if that's your question. But thanks, Ray, for the question. Okay, we have a question from Paul Mitchell. Hi, great quarter. Congratulations to the entire Fortitude team. A few press releases ago, you had great drill results that included nonoxide, gold intercepts. Is there any discussion on how to proceed or process this ore? Thanks again, and congrats on a great quarter. Yeah, the nonoxide ore you're referring to is the stuff that's deep in the Isabella Pearl pit. That is the sulfide ore. Now, there's several mining companies in Nevada whose whole game plan and business plan is to mine sulfide ore and process it elsewhere, potentially at their own facility, but more than likely at some of the bigger, big, largest companies' facilities, toll mining, if you will. We're kind of watching that, see how that works for them. We would potentially have that ability to do that at Isabella Pearl, but I want to caveat all that with that is not our focus. So we are focused on the oxide. If something comes to the sulfide, great, but that's not a priority by any means. We have enough exceptional properties with surface and near-surface high-grade gold that's oxide that's in our wheelhouse that we should be focused on, and that's what we're doing. Thanks for the question, Paul. There's still questions here. Clyde? has got a question to support it to own all of the claims on the property. We own all our claims 100% on all our properties. Now, some of those claims are subject to what we call NSRs or net smelter royalties. And so none of our NSRs are over 3%, so they can range from 0.5% up to 3%. or anywhere in between. And what that means is when we're in production, those NSRs get paid on. And that's what's happening at Isabella Pearl. The NSR owners collect checks every month. But because we don't go over three, it doesn't impact us very much. But anyway, long and short of it, as we do on all our claims. Listen, we've had a lot of questions. Thank you very much. If I didn't get to your question, please just call it in directly and we're happy to get to you. But with that, let's just close the conference call for today. Thanks, everybody, for your participation. Again, thanks for all the great questions. And I look forward to speaking with you next quarter. Thank you very much. Have a good day.
spk00: Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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