Shares in Nevada-based gold miner and producer Fortitude Gold [OTCQB: FTCO] are on the move this month, climbing by almost 20%. Interest in gold producers with solid balance sheets seems to be picking up during the banking crisis. Fortitude Gold stock has seen the most buying last week, with shares up from around $6.4 to trade at $7.38 on Friday’s close in the US.
Fortitude’s management has always made it clear that its strategy is to grow organically, remain debt free and distribute substantial dividends. It currently has five high grade gold properties located in the Walker Lane mineral belt, along with a sixth high grade gold property in west central Nevada.
In its end-2022 results it reported net income of USD 14.7m or USD 0.61 per share, and increased its cash balance by USD 5m year-over-year. It also confirmed its previously announced 2022 annual production of 41,231 gold ounces, which exceeded the initial 2022 gold production target by 3%. The 2023 product outlook is 40,000 ounces of gold.
Gold price rally as retail investors pile in
The gold price has been on a run recently, up nearly 7% in March and hitting one year highs. While there has been a recent surge in interest from retail investors buying gold, this quarter has also seen considerable central bank buying, we think much of it being done on the quiet through convenient cut-out entities – e.g. Chinese companies with a considerable state stake. Russia, Turkey and China are all known to have been big gold buyers since the start of the year.
However, investors are also seeing considerable upside from gold miners. Shares in Newmont Mining NYSE:NEM has also picked up recently, although the stock is still marginally down for the month. Barrick Gold [NYSE:GOLD] is also up by +15.9% in the last 30 days.
Fortitude’s stock rally has been on the cards since the start of the year when it surged off the $5.40 level. By the end of January it was already hitting $6.60.
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Why is Fortitude’s stock price picking up momentum?
The OTC-traded gold miner has a number of factors going for it. The company’s balance sheet is very solid and it is valued by many investors for its consistent dividend yield. Fortitude declared a dividend of 4 cents / common share on 6 March.
On top of that, while it is a gold producer using its existing mine (Isabella Pearl), it also has significant exploration and development activities which could significantly enhance the company’s value.
“With a strong treasury, we believe we can develop and construct both the County Line and Golden Mile mine operations using our own cash without shareholder dilution,” explained Jason Reid, CEO. “Fortitude Gold remains a unique investment in the precious metal space offering investors exposure to gold production, a very attractive dividend yield at over 7.5% and district scale exploration potential in arguably the premier mining jurisdiction in the world, Nevada.”
In January Fortitude Gold announced an initial resource for its County Line property, which lies 19 miles northeast of its Isabella Pearl operations. Management believes this property has the ability to deliver gold resources to the Isabella Pearl process facilities, extending the life of Isabella Pearl potentially out beyond 2026.
