FTCO 8-K
Fortitude Gold Corp (FTCO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Item 2.02 Results of Operations and Financial Condition.
On November 1, 2022, Fortitude Gold Corporation issued a news release reporting its financial results for the quarter ended September 30, 2022. A copy of the news release is attached as Exhibit 99.1 to this report.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any of the Company’s filings or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are furnished with this report:
99.1News Release dated November 1, 2022.
104Inline XBRL for the cover page of this Current Report on Form 8-K.
Exhibit 99.1
FOR IMMEDIATE RELEASE NEWS
November 1, 2022 OTCQB: FTCO
FORTITUDE GOLD REPORTS THIRD QUARTER NET INCOME OF $1.7M OR $0.07 PER SHARE
COLORADO SPRINGS – November 1, 2022 - Fortitude Gold Corporation (OTCQB: FTCO) (the “Company”) reported production and financial results for the third quarter ended September 30, 2022 of 9,500 ounces of gold produced, $16.1 million net sales, and increase to its treasury to $42.2 million. Fortitude Gold is a gold producer, developer, and explorer with operations in Nevada, U.S.A.
Q3 2022 FINANCIAL RESULTS AND HIGHLIGHTS
| ● | $16.1 million net sales |
| ● | $1.7 million net income or $0.07 per share |
| ● | $42.2 million cash balance on September 30, 2022 |
| ● | 9,500 gold ounces produced |
| ● | 5.69 grams per tonne average gold grade mined |
| ● | $82.6 million working capital at September 30, 2022 |
| ● | $7.4 million mine gross profit |
| ● | $613 total cash cost after by-product credits per gold ounce sold |
| ● | $687 per gold ounce total all-in sustaining cost |
| ● | $2.9 million dividends paid, or $0.12 per share |
Overview of Q3 2022 Results
Fortitude Gold sold 9,419 gold ounces at a total cash cost of $613 per ounce (after by-product credits). Realized metal prices during the quarter averaged $1,719 per ounce gold*. The Company recorded net income of $1.7 million, or $0.07 per share. Cash and cash equivalents at quarter end totaled $42.2 million. The Company produced 9,500 ounces of gold during the quarter and maintains its 2022 gold production Outlook of 40,000 gold ounces (a range of 36,000 to 40,000 ounces).
Mr. Jason Reid, CEO and President of Fortitude Gold, stated “Production results for the quarter are in line with our 2022 production Outlook range. Financial results included net income of $1.7 million, all-in sustaining cost of $687 per gold ounce, $2.9 million in dividends to shareholders, $3.7 million deployed to exploration all while increasing our cash balance to $42.2 million. I believe we continue to execute our strategic business strategy, which has resulted in Fortitude outperforming our industry peers on year-to-date valuations during this strong market pullback in the mining equities.”
Mr. Reid continued, “Exploration drilling included continued exciting drill results from Golden Mile and exciting first drill results from County Line. A significant number of surface samples from our Ripper property generated drill targets for a possible 2023 drill program. Our exploration team continues to be exceptionally busy during the fourth quarter with drill programs planned along the Isabella Pearl trend, Golden Mile, County Line and East Camp Douglas properties. We are pleased to remain a profitable gold producer in the Walker Lane Mineral Belt, with a stellar portfolio of 100% owned properties, and believe we are moving closer to building our second mine in Nevada, U.S.A, arguably the world’s premier mining jurisdiction.”
The following Production Statistics table summarizes certain information about our Isabella Pearl Mine for three and nine months ended September 30, 2022 and 2021:
|
| | | |
| | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||
|
| 2022 |
| 2021 |
| 2022 |
| 2021 |
Ore mined |
|
|
|
|
|
|
|
|
Ore (tonnes) |
| 113,111 |
| 139,950 |
| 490,764 |
| 454,679 |
Gold grade (g/t) |
| 5.69 |
| 1.42 |
| 3.30 |
| 4.52 |
Low-grade stockpile |
|
|
|
|
|
|
|
|
Ore (tonnes) |
| — |
| 8,600 |
| 34,501 |
| 8,600 |
Gold grade (g/t) |
| — |
| 0.33 |
| 0.43 |
| 0.33 |
Waste (tonnes) |
| 202,201 |
| 1,838,027 |
| 1,696,225 |
| 4,894,937 |
Metal production (before payable metal deductions)(1) | | | | | | | | |
Gold (ozs.) |
| 9,500 |
| 11,478 |
| 30,355 |
| 37,593 |
Silver (ozs.) |
| 12,497 |
| 16,467 |
| 45,047 |
| 33,643 |
| (1) | The difference between what we report as “metal production” and “metal sold” is attributable to the difference between the quantities of metals contained in the doré we produce versus the portion of those metals actually paid for according to the terms of our sales contracts. Differences can also arise from inventory changes incidental to shipping schedules, or variances in ore grades and recoveries which impact the amount of metals contained in doré produced and sold. |
The following Sales Statistics table summarizes certain information about our Isabella Pearl Mine for three and nine months ended September 30, 2022 and 2021:
|
| | | | | |
| | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
|
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||
Metal sold | |
| | |
| | |
| | |
| |
Gold (ozs.) | | | 9,419 |
| | 11,454 | | | 30,567 |
| | 37,436 |
Silver (ozs.) | | | 12,111 |
| | 16,330 | | | 44,819 |
| | 33,171 |
Average metal prices realized (1) | | | | | | | | | | | | |
Gold ($per oz.) | | | 1,719 |
| | 1,789 | | | 1,871 |
| | 1,796 |
Silver ($per oz.) | | | 19.44 |
| | 23.98 | | | 23.34 |
| | 25.14 |
Precious metal gold equivalent ounces sold | | | | | | | | | | | | |
Gold Ounces | | | 9,419 | | | 11,454 | | | 30,567 | | | 37,436 |
Gold Equivalent Ounces from Silver | | | 137 | | | 219 | | | 559 | | | 464 |
| | | 9,556 | | | 11,673 | | | 31,126 | | | 37,900 |
| | | | | | | | | | | | |
Total cash cost before by-product credits per gold ounce sold | | $ | 638 | | $ | 658 | | $ | 685 | | $ | 596 |
Total cash cost after by-product credits per gold ounce sold | | $ | 613 | | $ | 624 | | $ | 652 | | $ | 574 |
Total all-in sustaining cost per gold ounce sold | | $ | 687 | | $ | 793 | | $ | 749 | | $ | 663 |
| (1) | Average metal prices realized vary from the market metal prices due to final settlement adjustments from our provisional invoices when they are settled. Our average metal prices realized will therefore differ from the market average metal prices in most cases. |
*Average realized metal prices include final settlement adjustments for previously unsettled provisional sales. Provisional sales may remain unsettled from one quarter into the next. Realized prices will therefore vary from average spot metal market prices upon final settlement.
See Accompanying Tables
The following information summarizes the results of operations for Fortitude Gold Corporation for the three and nine months ended September 30, 2022 and 2021, its financial condition at September 30, 2022 and December 31, 2021, and its cash flows for the nine months ended September 30, 2022 and 2021. The summary data as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021 is unaudited; the summary data as of December 31, 2021 is derived from our audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2021, but do not include the footnotes and other information that is included in the complete financial statements. Readers are urged to review the Company’s Form 10-K in its entirety, which can be found on the SEC's website at www.sec.gov.
The calculation of its cash cost before by-product credits per gold ounce sold, total cash cost after by-product credits per gold ounce sold and total all-in sustaining cost per gold ounce sold contained in this press release are non-GAAP financial measures. Please see "Management's Discussion and Analysis and Results of Operations" contained in the Company’s most recent Form 10-K for a complete discussion and reconciliation of the non-GAAP measures.
FORTITUDE GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share amounts)
| | September 30, | | December 31, | ||
|
| 2022 |
| 2021 | ||
| | (Unaudited) | |
| | |
ASSETS | | |
| | |
|
Current assets: | | |
| | |
|
Cash and cash equivalents | | $ | 42,196 | | $ | 40,017 |
Accounts receivable | |
| 339 | |
| 238 |
Inventories | |
| 45,131 | |
| 37,550 |
Prepaid taxes | | | 875 | | | 1,289 |
Prepaid expenses and other current assets | |
| 959 | |
| 2,228 |
Total current assets | |
| 89,500 | |
| 81,322 |
Property, plant and mine development, net | |
| 34,514 | |
| 37,226 |
Operating lease assets, net | |
| 1,027 | |
| 463 |
Deferred tax assets | | | 1,491 | | | 509 |
Other non-current assets | |
| 882 | |
| 2,909 |
Total assets | | $ | 127,414 | | $ | 122,429 |
LIABILITIES AND SHAREHOLDERS' EQUITY | |
|
| |
|
|
Current liabilities: | |
|
| |
|
|
Accounts payable | | $ | 3,546 | | $ | 2,127 |
Operating lease liabilities, current | |
| 1,027 | |
| 463 |
Mining taxes payable | |
| 1,249 | |
| 1,699 |
Other current liabilities | |
| 1,080 | |
| 1,022 |
Total current liabilities | |
| 6,902 | |
| 5,311 |
Asset retirement obligations | |
| 5,694 | |
| 4,725 |
Other non-current liabilities | |
| 5 | |
| 45 |
Total liabilities | |
| 12,601 | |
| 10,081 |
Shareholders' equity: | |
|
| |
|
|
Preferred stock - $0.01 par value, 20,000,000 shares authorized and nil outstanding at September 30, 2022 and December 31, 2021 | |
| — | |
| — |
Common stock - $0.01 par value, 200,000,000 shares authorized and 24,024,542 shares outstanding at September 30, 2022 and 23,961,208 shares outstanding at December 31, 2021 | |
| 240 | |
| 240 |
Additional paid-in capital | |
| 103,682 | |
| 103,476 |
Retained earnings | |
| 10,891 | |
| 8,632 |
Total shareholders' equity | |
| 114,813 | |
| 112,348 |
Total liabilities and shareholders' equity | | $ | 127,414 | | $ | 122,429 |
FORTITUDE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 2022 and 2021
(U.S. dollars in thousands, except share and per share amounts)
(Unaudited)
|
| Three months ended | | Nine months ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
|
| 2022 |
| 2021 |
| 2022 |
| 2021 | | ||||
Sales, net | | $ | 16,122 | | $ | 20,422 | | $ | 55,476 | | $ | 66,979 | |
Mine cost of sales: | |
|
| |
|
| |
|
| |
|
| |
Production costs | |
| 5,703 | |
| 7,075 | |
| 19,673 | |
| 21,219 | |
Depreciation and amortization | |
| 3,005 | |
| 3,668 | |
| 9,938 | |
| 11,953 | |
Reclamation and remediation | |
| 60 | |
| 40 | |
| 183 | |
| 116 | |
Total mine cost of sales | |
| 8,768 | |
| 10,783 | |
| 29,794 | |
| 33,288 | |
Mine gross profit | |
| 7,354 | |
| 9,639 | |
| 25,682 | |
| 33,691 | |
Costs and expenses: | |
|
| |
|
| |
|
| |
|
| |
General and administrative expenses | |
| 1,638 | |
| 1,378 | |
| 3,912 | |
| 8,723 | |
Exploration expenses | |
| 3,687 | |
| 2,023 | |
| 8,627 | |
| 4,380 | |
Other expense, net | |
| 60 | |
| 48 | |
| 142 | |
| 132 | |
Total costs and expenses | |
| 5,385 | |
| 3,449 | |
| 12,681 | |
| 13,235 | |
Income before income and mining taxes | |
| 1,969 | |
| 6,190 | |
| 13,001 | |
| 20,456 | |
Mining and income tax expense | |
| 248 | |
| 1,544 | |
| 2,097 | |
| 5,075 | |
Net income | | $ | 1,721 | | $ | 4,646 | | $ | 10,904 | | $ | 15,381 | |
Net income per common share: | |
|
| |
|
| |
|
| |
|
| |
Basic | | $ | 0.07 | | $ | 0.19 | | $ | 0.45 | | $ | 0.64 | |
Diluted | | $ | 0.07 | | $ | 0.19 | | $ | 0.45 | | $ | 0.64 | |
Weighted average shares outstanding: | |
|
| |
|
| |
|
| |
|
| |
Basic | | | 24,024,542 | | | 23,961,208 | | | 24,014,959 | | | 23,846,686 | |
Diluted | |
| 24,190,375 | |
| 24,211,606 | |
| 24,201,239 | |
| 24,078,226 | |
FORTITUDE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2022 and 2021
(U.S. dollars in thousands, except share and per share amounts)
(Unaudited)
| | Nine months ended | ||||
| | September 30, | ||||
|
| 2022 |
| 2021 | ||
Cash flows from operating activities: |
| |
|
| |
|
Net income | | $ | 10,904 | | $ | 15,381 |
Adjustments to reconcile net income to net cash from operating activities: | |
|
| |
|
|
Depreciation and amortization | |
| 10,052 | |
| 12,045 |
Stock-based compensation | | | 143 | | | 3,363 |
Deferred taxes | | | (982) | | | (140) |
Reclamation and remediation accretion | | | 183 | | | 116 |
Other operating adjustments | |
| (38) | |
| (88) |
Changes in operating assets and liabilities: | |
|
| |
|
|
Accounts receivable | |
| (101) | |
| (1,483) |
Inventories | |
| (2,199) | |
| (6,318) |
Prepaid expenses and other current assets | |
| 1,269 | |
| (343) |
Other non-current assets | |
| (31) | |
| (19) |
Accounts payable and other accrued liabilities | |
| 1,866 | |
| 555 |
Income and mining taxes payable | |
| (36) | |
| 153 |
Net cash provided by operating activities | |
| 21,030 | |
| 23,222 |
| | | | | | |
Cash flows from investing activities: | |
|
| |
|
|
Capital expenditures | |
| (10,184) | |
| (1,753) |
Net cash used in investing activities | |
| (10,184) | |
| (1,753) |
| | | | | | |
Cash flows from financing activities: | |
|
| |
|
|
Dividends paid | | | (8,645) | | | (4,433) |
Issuance of common stock | | | — | | | 500 |
Proceeds from exercise of stock options | | | 63 | | | — |
Repayment of loans payable | |
| (65) | |
| (629) |
Repayment of capital leases | |
| (20) | |
| (344) |
Net cash used in financing activities | |
| (8,667) | |
| (4,906) |
| | | | | | |
Net increase in cash and cash equivalents | |
| 2,179 | |
| 16,563 |
Cash and cash equivalents at beginning of period | |
| 40,017 | |
| 27,774 |
Cash and cash equivalents at end of period | | $ | 42,196 | | $ | 44,337 |
| | | | | | |
Supplemental Cash Flow Information | |
|
| |
|
|
Income and mining taxes paid | | $ | 3,149 | | $ | 5,063 |
Non-cash investing and financing activities: | |
|
| |
|
|
Change in capital expenditures in accounts payable | | $ | (343) | | $ | 1,132 |
Change in estimate for asset retirement costs | | $ | 710 | | $ | 499 |
Equipment purchased under finance lease | | $ | — | | $ | 16 |
Right-of-Use assets acquired through operating lease | | $ | 3,899 | | $ | — |
About Fortitude Gold Corporation
Fortitude Gold is a U.S. based gold producer targeting projects with low operating costs, high margins, and strong returns on capital. The Company’s strategy is to grow organically, remain debt-free and distribute substantial dividends. The Company’s Nevada Mining Unit consists of five high-grade gold properties located in the Walker Lane Mineral Belt and a sixth high-grade gold property in west central Nevada. The Isabella Pearl gold mine, located on the Isabella Pearl mineralized trend, is currently in production. Nevada, U.S.A. is among the world’s premier mining friendly jurisdictions.
Cautionary Statements: This press release contains forward-looking statements that involve risks and uncertainties. If you are risk-averse you should NOT buy shares in Fortitude Gold Corp. The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this press release, the words “plan”, “target”, "anticipate," "believe," "estimate," "intend" and "expect" and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, without limitation, the statements regarding the Company’s strategy, future plans for production, future expenses and costs, future liquidity and capital resources, and estimates of mineralized material are forward-looking statements. All forward-looking statements in this press release are based upon information available to the Company on the date of this press release, and the Company assumes no obligation to update any such forward-looking statements.
Forward looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. The Company's actual results could differ materially from those discussed in this press release. In particular, the scope, duration, and impact of the COVID-19 pandemic on mining operations, Company employees, and supply chains as well as the scope, duration and impact of government action aimed at mitigating the pandemic may cause future actual results to differ materially from those expressed or implied by any forward-looking statements. Also, there can be no assurance that production will continue at any specific rate.
Contact:
Greg Patterson
719-717-9825
[email protected]
www.Fortitudegold.com