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Fortitude Gold reports progress on County Line project


On 2 August, Fortitude Gold announced solid Q2 results. The company produced 10,980 ounces of gold at their Isabella Pearl mine. The ounces were produced at a mere US$733 per ounce, using an All-In-Sustaining-Cost measure. With the gold sold at an average price in excess of US$1,800 per ounce, this healthy margin produced net income of US$0.27 per share for the quarter and increased the cash balance to US$40.7mln at the quarter end, 30 June 2022.

Fortitude also maintained their 2022 annual outlook of 40,000 ounces of gold production.

The next day, Fortitude Gold also announced drill results from their Golden Mile project, which looks likely to be the companies second gold mine. One drill hole intercepted 12.2 meters at 4.9g/t gold from a shallow depth of only 41.2 meters. Part of this intercept included 3.1 meters at 16.8 g/t gold. Drill results like this bode well for a positive final investment decision on the project.

As a shareholder, I was pleased with both the production and exploration news, especially since Fortitude Gold pays an inflation-fighting 7.1% dividend yield, as of the time of writing. One of the highest dividend yields in the gold equity space.

Listening to Fortitude Gold’s 3 August 2022 conference call, there was one further piece of information that I found interesting. CEO Jason Reid mentioned their County Line project, which I can’t remember being mentioned specifically for some time.

The following slide shows the location of County Line relative to Isabella Pearl, Golden Mile and their other Nevada projects.

Fortitude Gold Gold Exploration Properties
Source: Fortitude Gold’s company presentation.


On the conference call, Jason Reid commented:

“On another exciting note, we are receiving drill results from County Line’s initial drill program and have intercepted high-grade gold in nice widths. We look forward to updating shareholders with a drill result press release in the near future, and ultimately running an initial analysis on the potential of County Line.”

Then in the Q&A section of the conference call. Jason Reid refers to County Line again when answering a caller’s question, “Is there any other exploration drilling completed beyond the Golden Mile property? If you’re referring to our other properties, yes. And I just referenced we just had our maiden exploration program at County Line and we hit some excellent grade over there with really good intercepts. Some of it’s really shallow, some of it’s deep. So, I get excited about that too. That is a very exciting situation because, in that situation, at this point, we wouldn’t plan to build anything there. We would just move forward to try to, if there’s an economic deposit there, mine it and truck it to Isabella Pearl.”

So, what do we know about the County Line property? We know it’s located 23 kilometres (14 miles) north of the Isabella Pearl project, which, as Reid comments, is ideal for leveraging existing infrastructure.

Gold Resource Corp’s old news release from 12 March 2018 discussed the acquisition of County Line and shows the County Line tenement boundary (see image below). For those not familiar with Fortitude Gold’s history, the company was spun out of Gold Resource Corp at the end of 2020.

Fortitude Gold County Line Property Targets
Source: Gold Resource Corp news release dated 12 March 2018

Gold Resource Corp’s March 2018 news release also makes the following comments on County Line:

“The County Line property is part of the Paradise Peak collection cluster of high-sulfidation epithermal deposits. The district historically produced a total of 1.5 million ounces of gold and 38.9 million ounces of silver. The County Line open pit historically produced approximately 81,000 ounces of gold and 760,000 ounces silver. The Porphyry (East) Pit, located approximately 2,500 feet south east of the County Line pit, produced approximately 7,400 ounces of gold and 8,000 ounces silver. While both open pits represent exploration targets, other targets include Newman Ridge and the Jackpot Zone.”

If you look at the image above, you can see the old Paradise Peak Mine main pit on the right of the image, outside the tenement boundary, and the historic County Line pit and the Porphyry (East Zone) pit on the left of the image. Other exploration targets Newman Ridge and the Jackpot Zone can also be identified.

The release goes on to say:

“The Company’s main objective with this acquisition is to explore new prospective areas of the property, as well as evaluate the potential of delineating and expanding mineralized material in the historic open pits. During Company due diligence, rock chip samples obtained from the bottom of the County Line pit averaged 2.2 grams per tonne (g/t) gold with cyanide bottle-roll tests on those samples yielded an average of 94.5% gold recovery in approximately two hours.”

A cyanide bottle-roll test is an early-stage metallurgical test to see how easily the gold can be extracted. 94.5% gold recovery in approximately two hours is encouraging news and while further tests will be needed, suggests that this ore from the bottom of the old County Line pit might still be oxidised and suitable for processing at Isabella Pearl’s heap leach operation.

Signs, so far, are encouraging, and I look forward to a full update on the maiden drill program at County Line. It’s pleasing to see more progress on another one of Fortitude’s projects. They have a large, exciting, tenement-holding in Nevada, which I believe the market has failed to recognise.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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This Post Has 4 Comments

  1. Thank you Roger! I hadn’t dug into the acquisition press release, great that you pulled all of that info together. I was on a site visit in early Nov. 2021, and we drove by the County Line property on the way back to Reno. Either Jason or Greg Patterson mentioned the encourging chip samples and said they hoped to one day discover 10-40K oz of ore that could be trucked to Isabella Pearl, basically to extend the 40k/y mine life another part or even a full year. Gold investors are so fixated on oz/y as the key growth metric, I think most are underestimating the significance of extending the mine life of a steady 40k/y highly profitably producer. FTCO has so many targets and will be able to drill drill drill, the result of which could easily be a significant increase in oz/y 4-5 years out, and maybe even a third mine in ten years. A sector leading dividend, high margins and huge profits for the next 3 years, a ten year mine life due to GM, County Line, and probable resource replacement at Isabella-Pearl, just seems like an incredible value proposition to me. If sentiment for gold miners gets bullish again after two years of torture, FTCO could perform like GORO did 12 years ago.

    The other drilling info they mentioned in the conference call was silver oz at GM. Any silver at the Pearl is good fortune, but they said there’s not enough there to make a reliable credit for decreasing mining costs. But they do expect to have a silver credit at GM when they release the updated resource later this year of early next year, I thought that was also great news. I’m a retired investor living in LA, and apparantly I have the second largest retail position, at least up till now. In other words, i’m highly biased, Been a tough slog since the Nov. site visit, their market cap is less now than it was then depsite good to great press releases since then. Eventually, I expect this company to be ‘discovered’, then liquidity and share price should increase signifiantly … unless gold tanks below $1700 again. Thanks again for your comments! Christopher

  2. Christoper,

    It’s great to hear from a fellow FTCO shareholder and many thanks for your comments. Particularly your comments discussing the site visit back in November 2021.

    I agree that investors can get fixated with annual gold production. I’m interested in profitable gold production which Fortitude has established at Isabella Pearl. I also agree on your comments on value. Perhaps the markets obsession with annual production metrics explains why the share, in my opinion, is somewhat undervalued?

    The favourable silver recoveries at Isabella and the potential for silver credits at Golden Mile are all added tailwinds. And I was encouraged by that too.

    I understand your comment on the share price being a tough slog since the site visit in Nov. However, I do enjoy the fact that we receive our regular monthly dividend payments. It allows me to reinvest my dividends at a good price and allows me to start compounding! And since Warren Buffett says that his wealth has come from “a combination of living in America, some lucky genes, and compound interest.”, I’m happy to be compounding too!

    One other thing to mention on County Line, when I was reading up on Paradise Peak, I came across the following on a website called Portergeo:

    “At the East Zone occurrence the Older Andesite sequence, beneath the mineralised tuffs horizon, is the host to a large zone of low grade gold mineralisation of porphyry type, with gold present as a quartz veinlet stockwork cutting sericitised andesite flows. It has been suggested that a porphyry stock may occur at depth below this zone (Sillitoe & Lorson, 1994).”

    Now, the East Zone, I believe, can be seen in the map of County Line in the article above. It’s labelled Porphyry (east zone) pit.

    What I like about this, is there appears to be so much to explore. Fortitude Gold is, of course, looking for gold. But if we happen to drill into a large copper-gold porphyry, then so be it! I’ll be interested to see if they drill near the Porphyry (east zone) pit in the upcoming drill report.

    Best wishes, Roger

  3. Mr. Breuer,

    I very respectfully disagree. IP was a homerun!. 40k ounces from GM does not cover the dividend unless gold gets to 2,000 plus. A 100k ounce producer puts FTCO as a mid level producer without blowing out the balance sheet.

  4. A response from the author Roger Breuer –

    “Hi Randy, Many thanks for your comment. Isabella Pearl has indeed been a great success to date. According to Fortitude Gold’s presentation, it’s scheduled to produce until the end of 2024 and they’re exploring the possibility of extending the mine life, either from more ore nearby or perhaps, trucking ore from County Line will be possible? Only time will tell. Studies remain on-going at Golden Mile and an investment decision is still to be made. But recent drilling of 12.2m at 4.9 g/t gold is encouraging. I’m looking forward to the technical study being released towards the end of 2022 or early next year to fully assess the economics. On dividends, Fortitude’s policy in their presentation says ‘DIVIDEND POLICY: returning as much cash to shareholders as soon as possible while balancing the capital needs of operations, reinvesting capital back into the business for organic growth and paying taxes.’

    “Dividends certainly need to be earned before they can be paid but I’m confident that Fortitude will get this balance right. They seem to have a strong capital discipline.”

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