In a year that has been tough going for many junior gold miners, Nevada-based gold miner and explorer Fortitude Gold Corporation [OTCQB: FTCO] managed to exceed its initial production plans, turn in strong earnings, increase its cash balance, keep paying out a monthly dividend to shareholders and line up a number of projects for 2023.
The company reported a net income of $14.7 million, or $0.61 per share, and an increase in its cash balance of $5 million year-over-year to $45.1 million. Fortitude Gold’s working capital stood at $84.1 million at the end of December with cash from operating activities at $28.6 million.
Fortitude Gold exceeded its 2022 gold production outlook by 3% as operations delivered over 41,000 gold ounces at a low all-in cost of $725 per ounce. Looking at the year ahead the Nevada-based miner expects its output to remain in the same ballpark, targeting a range of between 36,000 and 40,000 gold ounces in 2023.
Tough twelve months for junior miners
The results are even more impressive when set against the rest of the sector which has struggled over the last twelve months as seen in the decline of the GDXJ junior gold miners’ index by over 20% in 2022.
Compared with other gold producers of the same size Fortitude Gold works at high margins, has a tight capital structure, no long-term debt, a strong treasury and very good exploration potential on its properties in one of the most mining-friendly jurisdictions.
Fortitude Gold’s chief executive and president Jason Reid explains that the company was specifically designed to create shareholder value not only by being a gold equity but also by having a second valuation metric of an attractive dividend yield.
The company has over the years increased its dividend to the current level of 48 cents, paid out on a monthly basis. This dividend approach separates Fortitude Gold from most other junior gold producers as it allows the firm to tap into a pool of investment capital that is larger than the gold space itself, the pool of investment capital that chases dividends and yields.
When asked if he is considering increasing the dividend any further Reid explained, “We could increase the dividend today but we want to make sure we have enough capital to build the next mine.”
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Isabella Pearl and Golden Mile
The central focus of Fortitude Gold’s operations is the Isabella Pearl mine which reported an estimated 51,900 recoverable gold ounces on its heap leach pad as of the end of December. Over the last twelve months, the company has worked on preparing its County Line property located 19 miles away from Isabella Pearl to eventually start feeding into the Isabella Pearl heap leach process, extending the potential life of Isabella Pearl into 2026 and potentially beyond.
Another investment stream is going towards the Golden Mile property where exploration drilling continues and mine equipment and materials are being purchased in anticipation of a potential mine development decision.
“We are aggressively moving both the County Line and Golden Mile properties forward in the permitting process with the Bureau of Land Management and the State of Nevada with the goal of becoming a near-term, multi-mine operator,” said Reid.
