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MINING | FORTITUDE GOLD
FORTITUDE GOLD An unrivalled portfolio of gold assets in the Walker Lane Belt of Nevada delivering substantial dividends and yield
The management team and board of US-based miner Fortitude Gold have a distinct past life under NYSE-listed Gold Resource Corp – a well established gold and silver producer with operations in Oaxaca, Mexico. This nucleus of industry veterans guided Gold Resource through a decade of production and profitability, with over US$1 billion in revenue generated even during the depths of one of the deepest bear markets the mining industry has experienced. “Early on at Gold Resource we didn’t have many capital expenditures year-overyear, we had a tight capital structure and a great margin. What that enabled us to do is pay substantial dividends,” explains Gold Resource’s former CEO and president Jason Reid, who currently fulfils the same roles for Fortitude. In fact, Gold Resource returned over $116 million in dividends to shareholders over a 10-year period – a substantial amount for a gold miner not yet into the intermediate producer space. “Our IPO came out at $1 per share and several years later we hit a high of $30 with our business strategy. During that time, we fielded shareholder calls that had never touched a mining company in their life; they were chasing dividends and yield. We outran our peers and created tremendous shareholder value. At that point, the lightbulb went on for us as we tapped into a successful business strategy that very few do in the mining industry.”
However, the team’s vast ambitions were soon to be bashed by a brutal bear market that tore the entire space down. Unlike many of its peers, Gold Resource survived the downturn and continued to reward its shareholders with regular monthly dividend payments. When the market returned to growth post2016, the team identified an opportunity to do it all again in a Tier 1 jurisdiction. “We completed about a year of due diligence before we made the final decision to spin out our Nevada mining unit, which we believed would create greater shareholder value as a standalone company, along with diversification in terms of jurisdiction, as all of the other assets were in Mexico. “In December 2020, we spun off the Nevada mining unit to shareholders. We did that with the core purpose of walking that same successful path we walked early on with Gold Resource but in a separate
MINING | FORTITUDE GOLD
company, Fortitude Gold.” Only this time, they will be
confirmation of what Reid and
working exclusively in a
co already knew.
jurisdiction that has just been
Lane Mineral Belt. Fortitude’s
ranked as the most attractive
“Mining friendly jurisdictions
flagship project is the aptly
region in the world for mining
are becoming increasingly
named Isabella Pearl mine,
investors.
scarce around the globe,
which consists of two primary
and so having a mining
areas of mineralisation. The
unit in a premier mining
Isabella area outcrops at the
The Fraser Institute’s
jurisdiction tells investors that
surface at 1 g/t gold, but the
Annual Survey of Mining
we are in a safe place. That’s
firm is chasing gold grades
Companies is regarded as
very important nowadays,
between 3-5 g/t deep in the
the most comprehensive
with increasing talk of
Pearl.
report on government
nationalisation of mines
policies, regulations and tax
around the world.”
Simply the best
regimes that either attract or
145
mile radius in the Walker
To put this in perspective, many miners in Nevada chase
discourage mining investors,
Fortitude Gold’s Nevada
0.5 g/t gold deposits and can
so for Nevada to come out on
mining unit is comprised of
still operate mines profitably
top in 2020 was just further
a series of high-grade gold
with that grade. So, the 2 g/t
properties all within a 30-
average gold grade at Isabella
MINING | FORTITUDE GOLD
become the beating heart of Fortitude’s integrated network of deposits in the region. This synergistic approach Pearl is really exciting and very
with near perfect precision,
will allow for equipment and
profitable, according to Reid.
we’re experiencing a grade
resource sharing between
situation that has exceeded our
the five projects, along with
The deposit has even exceeded
expectations to the upside and
individual heap leach facilities
expectations after Fortitude
has required us to increase
taking gold to carbon and
hit pockets of 10 g/t, a pocket
our production outlook [to 40-
then trucking that carbon to
of 30 g/t and a pocket of 100 g/t
45,000 ounces of gold] for the
the central process facility at
(that’s almost three ounces!)
year.”
Isabella Pearl for final gold
in the last two benches of the Phase 1 pit.
Operational synergies
dore production. The company believes that this
“In a world awash with 0.5
In just 10 months from project
approach will substantially
grams per tonne mines, where
ground-breaking, Fortitude
decrease permit timing,
companies have to make up
built a fully operational
decrease project capital costs
for the low grade by moving
process facility at the Isabella
and decrease construction
a tremendous number of
Pearl complex and produced
timeframes on future open pit
tonnes at a significant cost and
first gold. The facility is set to
heap leach operations.
1 46
One of the most advanced
five mining companies have
projects outside of the flagship
been on a property. We get
is Golden Mile – a district
to leverage the 200+ holes
scale property with two areas
that were in the ground from
of known mineralisation and
previous activity.
drill highlights including 36.6 metres at 10.26 g/t from 15.2
“We have two rigs currently
metres downhole.
operating at Golden Mile for infill and step out drilling to
“Golden Mile has had a
come up with our maiden
history of miners working
resource. We hope to
on it, which we love, because
complete that by year-end. The
I think the average deposit
goal is to move Golden Mile
isn’t discovered until four or
forward to make a production decision ASAP.” Fortitude’s current cluster of assets were identified and
FO RT I T U DE GOLD AT A G L A N C E
collated in about a four-anda-half year spell during the depths of the previous bear market, when most groups were looking to sell, not acquire, properties. This proactive countercyclical approach allowed the company to gain a property
STOCK TICKER: OTCQB:FTCO MARKET CAPITALISATION: US$171.56 mIllion (as of August 27, 2021)
pole position in the highly prospective Walker Lane Trend, which is now a much more contested space, in line with the elevation of the gold
@
price over the last 18 months.
MINING | FORTITUDE GOLD
“It’s a totally different
sized land positions. We see
and distribute substantial
environment now
tremendous potential in our
dividends, provided that the
demonstrated by the fact
assets, for which everything
gold price remains at these
that I have other junior and
revolves around high-grade.”
healthy levels.
major mining companies
This is evident in that all five
moving into my backyard,”
Fortitude properties have
At the current gold price
Reid reveals. “We would be
surface or near surface high-
of around $1,800 per once,
hard pressed to put together a
grade gold.
the company’s margins are
property portfolio like we have
such that it was able to put
now if we were trying to in this
A golden future
competitive market.
Looking forward, Reid is
far in 2021 and increase its
extremely confident that
monthly dividend by 16.7%
“We stayed true to our criteria
Fortitude can continue to
to $0.035 per common share,
for acquisitions of high-grade
execute on its strategy to grow
or $0.42 annually. Today the
properties with district-
organically, remain debt-free
company’s yield on its share
$13 million in the bank thus
MINING | FORTITUDE GOLD
price is delivering close to 6%
a gold equity and tap into that
These shareholders are
to shareholders.
pool of capital much larger
currently invested in Fortitude
than the gold space itself. A
through the OTCQB ‘venture’
“Even if gold pulls back a bit,
pool of capital with investors
market for US stocks, on
we can continue to put cash
that chase dividends and yield.
which the company holds an
in the treasury and pay our
Those investors are driving our
incredibly tight share structure
substantial dividend. We are
stock price right now.”
of under 24 million shares
positioned to outrun all of our
outstanding. The tight capital
peers, as a function of our
structure allows Fortitude
ability to transcend being just
to leverage its margin
MINING MINING | FORTITUDE | FORTITUDE GOLD GOLD
and distribute substantial
stresses that an additional
a US-based company. Having
dividends. Dividends counter
listing would have to be in
said that, we would consider
the gold investment criticism
conjunction with a relevant
a possible dual listing if for
that gold has no yield.
deal.
some reason Fortitude needed access to capital, but it would
When quizzed on a potential
“We considered a TSX listing
have to be the right fit and
dual listing on Toronto Stock
previously but eventually
there would need to be an
Exchange (TSX) – the number
decided against it as we are
accretive reason.”
one market for mining issuers worldwide and one with strong links to US investors – Reid
Published by Anderson Murray Media Ltd
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