Fortitude Gold Corp

star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jason Reed, CEO and President of Fortitude Gold. You may begin.

Great, thank you. Good morning, everyone, and thank you for joining Fortitude Gold Corp's 2023 year-end 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 our 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, February 28, 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 and our Form 10-K filed with the SEC for the year ended December 31st, 2023. In 2023, and for our third consecutive year, we met our annual production outlook. Year end results included net income of 17 million or 71 cents per share, 73.1 million net sales, 37,996 gold ounces produced, 12.5 million paid to shareholders in cash dividends, 41.2 million mine gross profit, 23 million cash from operating activities, 656 all-in sustaining cash costs, and 17.2 million exploration expenditures, a 49% increase over 2022. We achieved all of this while growing our cash balance by over $3 million to a near record cash position of 48.7 million. These results demonstrate 2023 was another great year. Operationally, we estimate 51,000 recoverable gold ounces on the heap leach pad at year end 2023. We continue to mine and stack lower grade civet cat portion of the Isabella pearl deposit on the heap while we await approval to mine the remaining higher grade oxide and oxide transitional gold ore deep in the pearl zone. Over 95% of the heap leach pads side slopes have yet to be leached, as well as the pad access area on the north end of the heap where the road and conveyors access the pad. These unleached areas are targeted to be brought into the leaching cell rotation in 2024. Obviously, the rest of the pad will continue to be leached again several times via rotational leaching as part of the normal course heap leach operation. We estimate to recover these ounces on the pad by residual leaching over the next three years and as a function of a heap leach's customary declining residual recovery curves. As we look to execute on our original plan to overlap mine operations and layer production while transitioning to our second mine, we remain ready to begin development of County Line upon receipt of regulatory approvals. Our plan is to mine the ore as an aggregate operation, hauling crushed ore to our nearby processing facility at Isabella Pearl. With minimal infrastructure to be built at County Line, we are optimizing the mining sequence to include early access to the highest grade ore possible in County Line pit with a phased mining approach. We look forward to being able to add additional new gold ounces from County Line to our Isabella Pearl heap leach pads for operational longevity. A record exploration budget was deployed in 2023, which focused on County Line, Golden Mile, the Isabella Pearl Trins Scarlet North area, and East Camp Douglas. All these properties returned high-grade gold intercepts reflected in the numerous press releases issued throughout the year. In addition to County Line and Golden Mile, Scarlett is building a critical mass where we are looking at optionality to bring this area into our existing Isabella Pearl mine plan boundary to more efficiently explore it and quantify an initial resource. With continued exploration success, we see the potential of Scarlett being the next mineable resource along our Isabella Pearl trend. with high-grade surface and near-surface gold intercepts just 700 meters from our existing process facility, and the low hurdle rate of having only to justify mining and a short haul distance for processing may provide additional future ore feed optionality and longevity. Early in 2024, we announced the acquisition of two additional gold properties along the Walker Lane Mineral Belt, the Dauntless and Intrepid properties. Both fit nicely into our portfolio of now eight Nevada properties, all with surface and near-surface high-grade gold. For an update on the Pearl Deep permit, we continue to be in regular contact with the BLM, and two weeks ago we were given the strongest indication yet that the permit could drop in at any time. As soon as we are granted regulatory approval, we plan to mine the Pearl Deep and blend that high-grade OR with the lower-grade civic CAT OR currently being stacked on the pad. The BLM is the agency primarily overseeing this Pearl Deep permit modification. Over the course of this federal administration's tenure, we have witnessed firsthand what appears to be an understaffing of their BLM. And in my opinion, its hardworking employees appear overworked as some individuals are having to fill two separate job titles. While this administration readily spends billions and billions of dollars, including sending billions of dollars to other countries overseas, it unfortunately appears to be content to leave its BLM understaffed. It has been our experience that during the previous administration, the permit process was more efficient, even moving toward attempting to fast track the permitting processes. The exact opposite has been our experience thus far with this administration, which seems to be shared a shared experience with many other peer mining companies with operations in the US. While the exact timing of the BLM's permit is out of our hand, we are thinking outside the box. We have approached the Carson City BLM, as some other mining companies have done in their districts, offering to help fund additional Nevada BLM staff positions. We have received the BLM's Memorandum of Understanding in this regard. Their MOUs have been vetted by their lawyers and used in other districts like Battle Mountain and Winnemucca. MOU keeps everything in this regard at an arm's length transaction. If the Carson City BLM agrees, this could add to the local BLM team with a goal to alleviate some of their workload and permitting pressure. We are optimistic the BLM will add to their team either on our company's dime through the MOU, through additional federal funding, or ideally both. Our ability to execute our business plan is directly tied to our ability to acquire the needed permits in a timely manner. Given the most recent BLM feedback two weeks ago, I optimistically expect the Pearl Deep permit any day. Having said that, I would have thought by January or now by the end of February, it would have dropped in. And while we are seeing advancements on the county line permit recently, I had thought it too would have advanced farther and faster by now. The most recent feedback, which included a compliment on our county line plan of operations submission document, continues to provide us with the belief we will receive the permit subject to the NEPA process timing as well as we close in on the final phase of the county line permit review and approval. In addition, we also have another important permit in process with the BLM for our Golden Mile project. We plan to construct and operate an open pit heap leach operation to go the mile, where we can truck loaded carbon to our Isabella Pearl processing facility for final stripping and DORE production. Due to this feedback from the BLM two weeks ago, where we hear things are moving forward, yet we still don't have permits in hand, and with the unpredictability of permit timing, which is out of our control, we have chosen not to forecast a production outlook for 2024 until we have some of these key permits in hand. Of course, we will still be producing gold and generating cash flow, but providing an outlook without clarity on a few key permits would be unwise, especially county line, which is essential to layering our second mine production over our ongoing first mine production, which has always been contemplated as the plan to hold the production profile. In addition, we need our pearl deep permit in hand, not just hearing it's getting close, and we need to get a sense for county line construction timing before we can forecast an annual outlook. Until then, we continue to produce gold from the approximate 51,000 gold ounces on the heap leach pad at year end 2023, along with gold ounces being mined and stacked from Civic Cat portions and the Isabella Pearl deep when we get the permits. As we await key permits, looking forward into 2024, we expect to continue our investments in exploration and development activities across our exciting portfolio of 100% owned Nevada properties. With a very strong treasury and substantial capital already deployed acquiring equipment for County Line and Golden Mile, we target to develop both new mines with cash while avoiding shareholder dilution. We also remain committed to the shareholder dividend. Having planned for and accumulated a near record cash treasury, having no debt, and continued cash flow coming in from operations, we are in a very strong position from which to span the unknown permit timing bridge as we our second mine. With that, I would like to thank everyone for their time today on this conference call. And operator, if you can please open up the lines for any Q&A.

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