Fortitude Gold Corporation (FTCO) Earnings Call Transcript & Summary

Yes. We really haven't. I haven't. No, we're just going to be hit by whatever the diesel cost is depending on what mine we're mining from. Now for Isabella Pearl, you can't get any closer to the process facility. If you're at Scarlet South, you're really close to -- the big impact would be -- is County Line, which is 19 kilometers up the road. That there's nothing we can do about that. But having said that, keep in mind, we're also gaining on synergies inasmuch as we're not having to build a whole facility out at County Line. We were able to start the County Line mine for about as cheap as any mine could be built because all we have to do is truck it down the road. You're not building everything there and another process. And then when we extrapolate that out, looking forward, for Golden Mile, that's a little farther away. And so we're not going to be trucking the ore that long distance. So this will speak to what you're asking about. We're not going to be trucking the ore. We bought all the equipment like the process and it sits in our laydown yard, it's been engineered, designed, built, paid for. It sits in our laydown yard. When we get the approval, we'll haul it out, set it up, then when we process the ore out there. will take gold to the carbon phase and just truck the carbon, which is substantially less volume in trucking costs all the way back to our process facility. So that's how we're trying to navigate the efficiencies, if you will. And in doing so, we'll have -- we won't be hit by this massive diesel hauling ore directly there. The project wouldn't sustain itself if we were trying to do that. Does that make sense?

Yes, absolutely. And again, having purchased the equipment for Golden Mile well in advance, you probably saved quite a significant amount with inflation.

Yes, we did. Now...

Halving the cost of equipment and stuff for that, half that.

Yes. Having done that though, when we were trying to navigate the last administration's permit backlog and going deeper, et cetera, and then with the overall plan, we needed to use that crusher that we bought for Golden Mile, and that's actively being used at Isabella Pearl. So we will need to purchase another crusher out for Golden Mile. But that was just optionality and maneuverability to make sure we stay in business during that administration.

Okay. One last question. How many rigs do you have active right now? And in conjunction with that, the spend rate so far with the JV, are you able to share how much has been spent? I mean, I guess I could go in there and take a look at exploration costs. I don't know if we could break it out between East Camp versus other operations. But...

Yes. So our exploration we have -- as far as drill rigs, I assume you're meaning, we have at least we have four right now, and we're in a position to have as many as seven. And it's been kind of challenging to get the rigs especially with gold popping to 5,000 earlier in the year, over 5,000 -- boy, the rigs are really hard to come by. But we have good relationships with different drill companies and we're in a position to secure seven as our goal. Assuming that happens, we get the permit, we've never had seven drill rigs. So that's where we sit today, about four with the goal to go to seven. And as far as spend for Fortitude, we've done about $1.4 million exploration this year for Fortitude Gold, not JV, but it's other exploration. If we just look at the JV East Camp, we're at $2.6 million for the quarter. So that's about $3.9 million for the quarter of exploration, which the bulk of it is East Camp Douglas. So yes, I'm really excited about getting this permit because East Camp, as I've always stated, is home run potential for us. And with this JV and with the financial firepower behind the JV, we're in a position to put seven drill rigs really. I mean we -- this is very exciting for me. This puts us in a position to find one, if not multiple deposits, delineate them quickly. The goal up there is to try to delineate a justifiable mine to put it in production as soon as possible rather than drill it 5 years just try to find enough to justify building a mine with all the exploration upside beyond that, but then move it as quickly as possible to production. So truly exciting time, and that's exciting JV. So yes, I think 2027...

Assuming you're able to get up to seven drill rigs, the majority of those be at East Camp then?

Yes. They'll all be at East Camp. Okay. So -- we never had seven drill rigs. So you can imagine the workload that's going to be on our exploration team. We won't have the bandwidth nor do we want to focus a lot of the capital on all our other properties. Between those two things, we hope to do some exploration, for instance, I personally want to hopefully drill in 2027. Prospect Mountain, because that could be the next Isabella Pearl. But beyond that, most all drilling will be at East Camp. That will be the sole focus. And yes, we're going to be -- we never had an exploration plan like this.

Rightfully so at East Camp, yes. Very good. Thanks for taking the questions.

Perfect. Thanks, John. Good to talk with you. Let me go to some of these written questions. So for those who are joined online, please look at the next slide I forwarded and because it revolves or addresses some aspects of the question I'm about to read here from the online portal. "Are you concerned with future permit approvals considering the recent election results? And can we file for and secure more permits now under the current administration over the next few years?" So for those who joined online, I'm showing you a slide I prepared in preparation for this possible question. We expected to get this question. What's interesting is this came from an article Tuesday, November 10, so it's very current. And for those who aren't able to see it, I'm going to read a lot of it, "a major win for nuclear energy, nearing half of the Senate Democrats joined GOP to advance permitting overall." The Senate voted 73 to 25 on Monday evening to open debate on the Bipartisan American Affordability and Jobs Act, the sweeping permit overhaul written by Republicans and Democrats alike and they name who they are. Supporters were hoping to get for 15 to 20 Democrats, good for around 70 votes and the odds of success by this one group said it was 25% to 40%. Instead, 51 Republicans and 21 Democrats and one independent voted yes, that's 22 of 47 Senators who caucus with Democrats nearly half backing the bill -- billing -- backing a bill Trump has endorsed. And so I'm not going to read every one of these bullet points on this slide but point being -- well, I should read some of them, let me do a couple of them because they're good. "So including a limit of no more than 2 years for federal decisions on environmental approvals and restraints on agencies -- or excuse me, on agency's ability to withdraw permits", that's good. "If they put a limit on how long they can draw permits in 2 years." That would be wonderful. The next bullet point, "amending the National Environmental Policy Act, the NEPA, which you heard me refer to several times by reducing the scope of its applicability, i.e., who can sue and on what grounds, accelerating the build-out of transmission lines for enhanced backstop authority gives federal government more authority to approve major lines and helps permitting process much faster." So you're getting the point that you're trying to streamline it, they're trying to limit the NGO's ability to sue. And these are all positive things and what I find really positive. And this just happened is that both sides of the aisle are coming into play. And Greg and I were just talking about this before the conference call that -- because we're getting quite a few questions about the election and the impact of that is that even those perhaps on the far left that maybe have more of an anti-mining bent or slant. People are waking up on both sides of the aisle that we cannot ignore metals and how important they are for our way of existence. And so there has to be a happy medium. And I think what we're seeing here in this particular discussion that I'm showing you here and talking about, that's happening. So even though then the election happened the way it did, it's still a positive that both sides of the aisle are coming together. Now dovetailing into both of those, another question we're getting is what about the new governor of Nevada, Governor-elect Aaron Ford. He is a Democrat and he replaced Republican, Joe Lombardo. What impact did that have? Well, if you look at his focus, he stated that the economic development agenda includes expanding Nevada's mining-related economy. He is fully aware of how important Nevada and its economy is tied to mining. And to underscore that, Greg pulled some interesting numbers for me, just looking at the mining tax revenue. And if we look at 2024, the Nevada Mining Association estimates the industry paid $483 million in taxes. And in 2025, that jumped to $686 million. So I don't think in any world, no matter what side of the aisle, Nevada is going to walk away from that kind of revenue. Especially given the economic situation of the world, let alone each state. So am I happy about the election results and the potential to move back to a Biden-era anti-mining anti-business? No, I'm not. And that concerns me. So let me just address the question. Let me go back to the question of what can we do. We are trying to permit everything we possibly can. And we're in the position to get this Golden Mile permit, hopefully, maybe 6, 7 months from now, depending on when they start the NEPA process and then hopefully start building immediately after that. So that will help us weather the storm, if you will. In conjunction with that, we're trying to get every possible permit we can. So great question. And that came from Ronald Darcy. Thanks, Ronald. Second question from Peter Mumford. Very encouraging quarter. A couple of quarters ago, "you spoke about wage pressures from your equipment operators. Has that stabilized? Or is it ongoing?" Peter, I think you might be referring to, instead of equipment operators, just wage pressure in general. Yes, that -- look, it is a fact in this industry that there's not enough people in this industry and we compete with every -- all our peers for the best possible team. And yes, that is ongoing, and I don't see any relief for that possibly in the rest of my career. Until we have a bunch of people, a bunch of college students start coming out of college with mining engineer degrees, et cetera. I don't know how this pressure is going to be relieved. I just don't see a lot of people going into this industry. And anybody who has kids in college or trying to figure out what to do, at least suggest to them, why don't you go into mining. As far as I'm concerned, if you graduate with a mining engineer, you're going to be calling your own shots in the future. So that pressure is still ongoing, and I don't see any relief from that, but great question. Next question again from Peter Mumford. "You have a lot of exciting opportunities at your different mines. How are you allocating mining resources among the various properties?" Another great question. So as I think you wouldn't -- you know and most on the call but if not, I'm going to just repeat this, the last administration knocked us flat off our horse. We're climbing back on. We have new permits in hand. We're working to get new permits to build new mines. But yes, it's been a slog. It has not been fun. And so we have to manage our capital and manage our focuses to specific things. Those you heard me talk about today. Golden Mile, that is important. We get that permit. The East Camp Douglas, get that permit to explore 150 acres. And put us in a position to have a company-changing situation where we could find one or more deposits in which that becomes our focus going forward. Obviously, we have all these other properties with all this other potential, and I wish we could have seven drills on the whole thing. We don't have the capital under Fortitude to go do that. So we have to focus on it. It's been -- everything has been tight, it just is what it is. But we're doing everything possible to get many permits as possible. We have a great plan with drilling coming up. And so those are our focuses. Okay. Well, there's a lot of questions. We're not going to be able to get to all of these today. But the next one, Brian Segabart. "With the cash balance currently sitting less than 10, do you still believe future mining development and exploration will be funded internally with cash flow?" Obviously, that would be the goal. We're not going to be doing a ton of drilling at Fortitude's other properties. And you heard me say, so we're going to save a lot in exploration. But yes, we're just going to see, we're just going to see how it goes. Next question, Harvey Volen. "while you wait for permits, is there enough production to support operations and continued dividends?" Great question, Harvey. Yes, obviously, we -- our goal is to continue the dividends. Again, that's not easy. It hasn't been easy the whole time either, but I think it speaks volumes that we can continue to pay it through all the difficult years that we lived through. Good question. Next question, Adam Hirst. "Across your operations, roughly how many loaded ore truck trips are you averaging per day? With the expanded leach pad coming online and new crusher capacity, what steps are you taking to increase the amount of ore you move each day?" Okay. As far as the crusher, I think I mentioned that we took this much larger crusher that we purchased that was going to go to Golden Mile, and we put it in the circuit at Isabella Pearl. So we have plenty of crushing capacity. That's, obviously, something we have to replace when we go build Golden Mile because we're going to leave that crusher there. So we're fine on crushing capacity. And the ore trips depends on what we're focused on that day. Sometimes we're focused more on Scarlet South, which is only about 500 meters away, and sometimes we're focused on County Line, which is 19 kilometers away. But yes, that just -- that varies. Thanks, Adam, for your question. Your next question, again, from Adam, "how have the partnerships on the two new properties helped advance those projects so far? Partnerships on the two new properties." Yes, I think it is one new property is what I think you mean, and that's with Hawthorne in the JV. Look, that -- we are very excited that Hawthorne shares our view on what East Camp can be, and it's gone great. And yes, you've heard me talk about having we have four drills, all of which I think are up there right now and positioned to get seven. It's going very well. Okay. Next question, again, from Adam. "Looking at 2027, what major equipment purchases and other capital spending, do you expect Fortitude itself to fund, mine, mill and process?" Equipment purchases will be the crusher, as I mentioned, and some liner heap liner, but as John and I -- John who had a question early on, and I were discussing, I'm very glad that we purchased the process. We had it designed, engineered, built and it sits in our laydown yard. I would pause to think what that would cost if we build that today, it would be a heck of lot more. So I'm glad we did that. So that would be the major purchase if we had to do anything at Golden Mile, but we've already done it. So yes, we still have some purchases ahead of us, but yes, the big ones out of the way. Okay. The next one, Timothy Paul, "in the County Line -- is the County Line ore placed is -- that County Line ore placed on the pad, converting to gold at a slower pace in Isabella Pearl. I noticed that the inventory figure has grown significantly, $7 million approximate -- $70 million approximately. And should one assume that you have determined the gold processing will require longer term?" These are all great questions. Every ore has a different recovery curve, a metallurgical recovery curve, meaning what time frame that takes to pull the ore out. So it gets quite complicated when we're blending ore, putting it on the pad, a pad that has numerous levels. And then on each level is a checkerboard, if you will, call those cells, and we put each cell under drip for various times and alternate them because that's the best way to pull gold out. You don't just constantly keep it under drip, you take it off drip, put it back on. There's so many -- I mean, a heap leach pad has a life of its own. And then you get a hard rain and then it changes the makeup of it and it modifies for a minute and then comes back to stabilization. So I'm just giving you some insight that it's pretty difficult to put your finger on it and say, "Hey, this is the exact what's happening." But what I can tell you is the residual leach takes a while. So we get this first initial bump and then the residual leach takes a while. It can take years. But that's just part and parcel of the heap leach. Operator, are there any more live calls before I keep moving on, if I...

Nope, there are no live questions at this time.

Okay. There's a couple more write-in. Let's see if we can get to them all. Let me refresh here. All right. The next one is from Adam Hirst. "You mined about 90,000 tonnes per month on average in Q3. What's the biggest constraint today on getting above 100,000 tonnes a month mined and stacked on the heap leach pad? Is it getting more ore out of the pits, having enough crews and trucks to move it or capacity at the crusher?" So it's not crusher or leach pad capacity. The biggest constraint -- there's a couple of them because, again, this question applies to three different mines, right? Isabella Pearl Deep, Scarlet South and County Line. So each one you could answer for these, but I'm not going to go into every single one of them, that'd take too long, but let me just talk about County Line. County Line as far as its situation is, we have in the bottom of the pit, some high grade, and then on a peripheral pit called the East Zone, we have lower grade. And then there's more higher grade at the bottom, but we have to move a tremendous amount of waste. So it's juggling between all three of those. We're mining low-grade, we're mining some high-grade in the bottom. We're doing a ramp retreat. We're doing the pushback. So to try to answer your question, it all varies based on what's happening at that particular week, what's happening in that particular quarter. But the mining is often what's the gating factor. And for the County Line pit, the main pit, it's space. It's not that big of a pit. So -- and you have to cycle, you have to drill, blast, haul out, there's only so much you can do in a given time frame. So the mining cycle impacts it. So it's very dynamic, but good questions. I hope I answered some of those. So listen, this has gone -- this conference call was much longer than I thought. Let's call it here. If I didn't get to your question, please call Greg and I -- if you didn't get the answer you wanted, call us. We're happy to talk to you directly. And with that, we'll close out the call. Thank you for your time. We'll talk to you next quarter.

Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.