Nevada-based gold miner Fortitude Gold [OTCQB:FTCO] gave shareholders a welcome surprise this week with a special dividend payout which it was able to pay out after very strong first quarter results.
The miner’s first quarter net sales came in at $21.5 million, net income was $6.4 million or $0.26 per share, while the company’s cash balance stood at a very healthy $52.3 million. Its working capital at the end of March stood at $90.1 million. These numbers put the company in a good position to go ahead with plans for further mine expansion this year.
President and chief executive Jason Reid attributed the strong earnings to the exceptional performance at the company’s Isabella Pearl mine, currently its main production site. Mine production came in ahead of budget, the all-in-sustaining cost per ounce was at an almost record low and the environment of the higher gold price meant that the company could achieve some of its best earnings yet.
During the quarter the company reduced the all-important all-in-sustaining cost per ounce produced to $578 an ounce, down from $848/oz, and was able to achieve an average price of $1,889/oz for its gold. After deducting by-product credits the first quarter all-in-sustain costs was actually as low as $499/oz.
Looking at the broader picture, the high interest rate environment and the instability in the US and European banking sectors have worked well for gold investors over the last six lifting prices from $1,820/oz at the start of the year to over $2,050/oz this week.
During the first three months of 2023 Fortitude Gold produced 11,487 ounces of gold, an increase of 16% on the same quarter last year. The average gold content in the mined ore was 3.83 grams per tonne. The Nevada miner still expects to produce a total of 36,000-40,000 ounces during the full year.
Special dividend and future expansion plans
When asked if the company was planning on making the special dividend a more regular event CEO Reid responded that Fortitude Gold plans to expand its production this year and that it intends to finance the projects from its own balance sheet. This means that while the company will continue to pay out a regular monthly dividend the special dividend will remain that, a special occasion event.
“Our strong cash flows, strong treasury and project capital expenditures to date totaling over ten million dollars position Fortitude to fully fund our next two targeted mine builds at County Line and Golden Mile,” said Reid.
Fortitude Gold plans on submitting the Environmental Assessment for the County Line project after obtaining permission from the Bureau of Land Management, which should happen in the near future, with similar plans for the Golden Mile project scheduled for mid-2023.
“Our business approach is expected to enable us to grow organically without shareholder dilution, add to mine life longevity, continue to explore our portfolio of properties, pay taxes as a profitable company, and distribute substantial dividends to shareholders with an attractive industry leading yield,” said Reid.
