Fortitude Gold Corporation (FTCO) Earnings Call Transcript & Summary

Yes, it's a great question, John. Okay. So on the permitting side, if we just look for what we're really focused on right now is trying to get additional mine permits. So then if what you just described as we go back to an anti-mining anti-business administration like we had under Biden, where they just ground everything to a halt. We want to have additional mine permits in our back pocket, so that we can weather any additional 4-year storm, so to speak. So that's why we're actively permitting -- in the process of permitting Scarlet North and Golden Mile. So the Golden Miles and the FAST-41, we continue to drill Scarlet North, but we're also in that permitting process. So the goal would be to have both of those permits, mine permits, ability to mine in our back pocket before the administration changes if it does. As far as your other question on -- can we get ahead of this, we are actively going after exploration EA permits, which to back up a minute, right now, we have to operate under a notice of intent called short -- NOI for short. And that gives us the ability to explore 5 acres. And once you're done with that 5-acre exploration and you want to do more, you have to rehab that area, prove to the regulators you rehab it and then apply for another NOI. I commonly call it a 5-acre dance. We've been doing that for years, but it takes time and it's very arduous. So we are going through this process, which when you do this, it takes about a year, but we've been going through the EA exploration process at both East Camp Douglas and Isabella Pearl. The East Camp Douglas EA is more advanced and that that's in the NEPA process right now. And if they stick to their time frames, but yes, if they stick to their time frame, you're looking at 6 months. So we've been under that for about a month plus. So we hope in the next handful of months, we'll get an EA exploration permit, which opens up as much as 120 to 125 acres. That is huge. That would allow us to spend a lot more drills, and that's the plan, and a lot more drills up to various locations with the goal to try to add as many ounces as possible as quickly as possible. Now one of the reasons we did the JV with Hawthorne is that now we have the funding to put as many drills as we want up there. It would be great to have 5 drills up there after we get the EA permit. And that just expedites. So instead of this 5-acre dance where you get 5 acres, you explore, then you have to rehab it, that all takes time and then go for another 5, we would open up over 100 acres of potential drilling, and we expect to add a tremendous number of ounces. We are doing the same thing on the trend at Isabella Pearl. So if we, as a company, all we have is Isabella Pearl, I'd still be very excited. Let alone we have all the other properties. But Isabella Pearl, we've locked up this major mineralized trend. And across the highways, the historic Santa Fe pit that did over 300,000 ounces, Isabella Pearl is doing over 200,000. As we move on our trend that we have 100% of, I am confident there will be another Isabella Pearl or there will be another Santa Fe on this trend. There'll probably be several. The trick is, for us to be in the game long enough to be the one that finds it. So we're actively going after this exploration EA that, again, once we get this one at Isabella Pearl, would open up another 100-plus acres. And that puts us in the ability to drill so many more areas, explore more efficiently, get a lot more data, so to speak, and hopefully add a tremendous number of ounces in a short amount of time. So we're trying to get ahead of that. Now is that all going to come to pass before the administration changes? No. But if we can get these 2 EA -- exploration EAs in both East Camp and Isabella Pearl, it just puts us in a better position for exploration drilling in case another administration comes in that just is slow to issue NOI.

I just want to say, you're really focusing on the active areas as opposed to, say, Ripper or somewhere else where you could get your permits in advance. And I frankly don't know how long those permits are good for if you don't have any actual activity on them. I'm trying to think even further down the road, I guess.

Yes. Well, we only have so much bandwidth. And keep in mind that we were in this area well before the bull market and metals came back. So we're watching major mining companies pick up things we turn down that we don't think is very prospective. We think we have the best properties. But we -- the flip side of that is we only have so much bandwidth to explore those properties, especially when we were put on our back foot with the Biden administration who almost completely derailed us as a company. So the fact that now we can get our feet back under us, we're looking to add as many deposits and as many mine permits as we can. So we're trying to, with the bandwidth we have, push as much as we can on all these fronts, permitting, both for mines, both for exploration. But coming like back to your comment on Ripper, yes, we're really not doing anything at Ripper right now. We're not -- It's not a core asset, so to speak. So we need to stay focused on what we can push as quickly as possible toward production to be safer in case we go back to an anti-mining administration that we have numerous mine permits in our back pocket to go build mines and again, weather a Biden equivalent. So hopefully, that answers that question.

Yes. I've got more, but I'll follow up later.

There are no further questions in the queue at this time.

Okay. Perfect. There's a bunch of questions in -- I'm not sure I can get up to all of these, but let's start on them. Okay. Ray [indiscernible], when will you be providing production guidance? This is a multi-facet question, so I'll stop at each one and give my response. We're a ways out before doing guidance. So we -- as you heard on the call, it's like drinking from a fire hose. There are so many variables. We're mining from 3 different locations. Each specific deposit has a different recovery curve. We're putting that material on a pad, commingling it so that it's going through all residual leach. It's really hard to give guidance. And I think at this point in time, any guidance we give would be wrong. But as we move forward, we're trying to get to a point -- get back to a point where we give guidance. I'd say, another part is, is production expected to increase in Q3. Those are the -- I can't tell you whether it is or isn't going to, but that's the goal. I mean it increased over the previous quarter. We were up 200%. So that's the goal, right? It's all about trying to get more production. Go back to some semblance to what we used to be, which used to be about 40,000 ounces a year. We'd love at some point to get back there, but we're a ways from that. The most important thing though is we have a mine permit, some new mine permits. Okay. Second, and then let's see, do you expect to grow the treasury of bullion? Great question. I would love to have a larger treasury in bullion. It's just right now, we have -- we're building several mines. We have hopefully Golden Mile in the queue. We have need for capital to deploy there. So we're probably not going to be adding to the bullion treasury. I'm glad we do have one. And in an ideal world, it would be much larger. But yes, given where we are today, I doubt we'll be adding to that. But we're happy to have it, the one we do have. Another part of your question, is it somewhat confusing to have combined numbers on the statement of operations and then subtract out the noncontrolling interest net income? I don't believe so. Janet can probably speak a little bit better on that than I can. But no, I don't think it is. Okay. So I think I got most of your questions there, Ray. Thank you very much. The next one, Clyde [ Lagomarsino ], Sorry buddy, I mispronounced your last minute. How is the leach pad expansion going? How much larger will it be in the existing pad? Great question. So we really -- given the fact that we got these permits under the Trump administration and now are putting 2 mines into production, that existing pad is going to fill quickly. So we really needed to move on the expansion. We signed the contract a while ago. And unfortunately, they were trying to finish up another project and they were a little delayed. But just on the conference call earlier this week, and they had moved equipment, but they hadn't start it, but they started. So they've officially started, which is great. And yes, that will buy us more pad time and more ore to go on it. As far as how much larger, I don't have the exact percentage, but what's nice is when we go out toward the west, which we are, it also allows us to go higher on the pad. So it's not just the spatial on the horizontal, but it's a vertical increase, too. So that's good. Thanks for the question, Clyde. Craig Hooper, can you provide some details on the pad with regards to specific mining areas? I assume the different ores are kept separate for metric tracking purposes. Is that a reason for the pad expansion? Great question. No, they're not kept separate. Where we get the information on the actual ores from various places are through the blast hole data, very good data, and that's where we track what the grade is, the tonnage, et cetera, that is moving to the pad. Once it gets to the pad and gets piled in the crushing area, and at that point, it gets co-mingled. When it gets put on the pad, think of these pads as like a very large checkerboard or chessboard. And then many boards stacked on one another. So each square on all those boards, let's call them a cell, and we go in and we leach a cell, cell at a time or 2 cells or 3 cells at a time. The whole pad is not being leached. It's just a couple of those squares on a checkerboard, so to speak. And then we take it off drip, which actually helps the recovery and then we put it back on. But when you think of how many cells are on the pad and all these different levels and each level has its own number of cells, it gets really complicated. So no, we know the grade and the ore going on, then it just gets co-mingled and then it's too hard to track. You can never track it otherwise. We don't -- you'd have to have this -- yes, you can't. That's just the way it is. But good question, Craig. Hopefully, I answered that. The next one, Scott [ McCloud ]. We had 611 ounces on hand at the end of the Q. How many ounces do you see holding on to going forward? I think, yes, you're referring to the bullion. I want to hang on to all those. There's really -- unless we need to sell them for CapEx projects or something. I don't envision gold going and making this another substantial pullback. I think it ran to 5,000 as a tell of where direction it's going to in the future, but it was on a hockey stick vertical curve. It needs to fill in, nothing goes straight up. So I love the fact that it's pulled back and held 4,000. And I see today or at least this morning, it was up to -- back up to 42. So I think there's a solid chance gold continues to move up. So yes, it just is nice to have physical. I think if all mining companies held a little bit of -- or a lot, if they could, physical in the treasury, that would be good in general for the gold price. But I don't know that too many do. Anyway, good question, Scott. Thank you. Next one, Stephen -- [ Stefan Banker ], provide guidance for Q3 based on current line of sight. Yes, we're not providing guidance yet. Like you've heard me say over and over on this call, there's just too many variables. We'll be wrong whatever we say. But the most important thing that we saw in this quarter is that production was up. So that's let us hopefully continue that trend. Gary Hayes, what is the strategy at East Camp? When will you be doing deeper drilling of the Lithocap? Great question. So we hit the 2 areas of the East Camp where we can drill, because it's a district sized land position, we are working off of 2 legacy NOIs. So one is in the Lithocap area and one is in the North Veins area. And we have tremendous amount of drill data that went into the labs. And the first data that was coming back out is the East Camp North Vein areas like White Rock, where you've seen all the press releases. We do have a bunch of drill results in the queue for the Lithocap. We're waiting to get those back and a few other areas as well. So the strategy there is that now that we have with this JV and the $40 million commitment, we have the capital to expedite this exploration. And then you heard me say earlier that we're trying -- we're going after this EA -- exploration EA to open up instead of the 5-acre NOI dance, the 125-acre ability to drill. And that to me will change everything. Because right now, we're drilling from certain pads in certain areas, and we're hitting phenomenal grades, great width and the ability to just create another pad near there to do a step out and possibly expand that could expedite the gold discovered up there. So again, that EA is in the NEPA process and hopefully, in 5 months or less, we'll have that. And then the flood gates are going to open. We're going to drill like crazy up there because we'll have the ability to. And the goal would be to try to define obviously as many deposits as we can. I think there'll be several up there, but also at some point to put a flag in the ground and make a decision and move and try to permit as well. So again, you hear this push from us. We're trying to explore. We're trying to permit as much as possible, having still the bad taste in our mouth for an anti-mining administration like the previous one. Okay. Another one from -- [indiscernible] a lot of them. Sorry if we don't get to all of you guys' questions here. Brian [indiscernible], do you anticipate further dilution with new share issues? Or is the primary plan to fund development with internal generated cash flow? Yes, the latter. It's primary to fund the internal generated cash flow. Everybody on this call knows we were beaten up and put on our back foot with the previous administration. That totally derailed our business plan. So now we're trying to put it back together, which with these permits in hand, we believe we can. We did have to dilute. Having said that, I put our capital structure up against any mining company in this space. We have still one of the tightest capital structures for a producer in this space. And those who may be listening who don't understand the space all that well, most explorers who are nowhere near production have hundreds of millions of shares outstanding. Many large producers have $0.5 billion to $1 billion, and we're a fraction of that. So we have one of the tightest capital structures. So yes, there's a time in the place, and we had to do that. But having said that, it would be great if we can just move forward. But again, I don't have a crystal ball. So what will happen, it will happen, but no, the goal would be to try to do it cash flow. Great question. Gary Simmons says, how many ounces oxide left to mine at Isabella Pearl? We don't know, Gary. We had a resource on Isabella Pearl, and we mined down through that resource. And this was back in the Biden era, but we weren't getting other permits for, for instance, Scarlet or County Line, which we needed to then put those into production and have overlap with Isabella Pearl. And those longer-term shareholders are on the call understand that we basically had a wall that we hit and we had to decide, do we continue to be a miner or do we send everybody home because we couldn't get the permits. Well, fortunately, gold at that time had gone to $3,000 an ounce, and we had run the pit shell at $1,800, let's say. So the fact gold launched, it allowed us to go back and revisit, does it make sense to go after gold mineralization. We know, it is lower than the pit shell, but we never put it in a resource. And so we had to call an audible. And because gold was at $3,000, it made this attractive to go deeper. So we're not -- where we're mining from, Gary, we don't have a resource on. We're just mining it as soon as it depletes completely, we'll redeploy that equipment elsewhere. But I tell you, Isabella Pearl is the gift that just keeps on giving. It has been, honestly just absolutely fabulous deposit. That's why we're also very focused on finding another one of these. I truly believe there's others that exist on this trend. We just want to be the ones to find it. It's a wonderful deposit. So coming back to your question, Gary, we don't have the number of ounces. We don't know. We just know there's mineral deep. We spent a year doing a pit layback at Isabella Pearl to access it. And that was never part of the original business plan. It was to stay in business during the Biden administration. So that's why we were doing it. But now we're down here, mining it and when it depletes, depletes. Tom [ Spurich ], what exploration expenses are budgeted for Q3 and Q4 in 2026? Great question. I'm not going to have the specifics you're going to like to hear. But obviously, the budget we have, for instance, with the JV as a function of getting the -- EA exploration EA, then we can deploy. It would be great to get 4 or 5 drills up there. That will be a really sizable budget once we get that. As far as budgeting for our expansion of either County Line or Scarlet North, we're just watching our dollars knowing that we have to put in other mines into production. So while we are drilling them, they're pretty modest, and they'll continue to be for the time being. I'm not going to give you a hard and fast number because too many things move, too many things are in flux right now. Yes, that's kind of where we're at. But fortunately, we are continuing to drill. And you've seen it in the drill results. And as you mentioned -- as I mentioned earlier in the call, we had some great drill results at East Camp Douglas. We had some great drill results at Scarlet North. And yes, we just got another tranche back, and you guys are going to be seeing another press release on Scarlet North. This is wonderful because again, whether we're currently drilling at Scarlet North on, for instance, a periphery of the next Isabella Pearl mine, we don't know. But as long as we're still hitting structure, still hitting gold, that not only adds to that deposit, if you will, but it also may be leading us to the next one. This is -- I'm going to call it now. This has gone in past time. But if we didn't get to your questions, please reach out to Greg or myself. You're going to get us. We don't have secretaries. We can answer your questions directly. I want to thank everybody for your time today. And again, sorry if I didn't get to your questions, but I think we're like 8 minutes over. With that, we'll conclude, and thank you. We'll talk to you next quarter.

Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.