"We wanted to transcend being a gold mining company and tap into a pool of capital much bigger than the gold investment space, which chases dividends and yield."

Jason Reid

CEO, PRESIDENT & DIRECTOR, FORTITUDE GOLD

January 13, 2022

Can you introduce Fortitude Gold (OTCQB: FTCO)?

Fortitude Gold was spun out of Gold Resource Corporation on December 31st, 2020. Prior to the spin-out, Gold Resource operated a Mexico mining unit and a Nevada mining unit, and achieved a decade of gold production and profitability, even during the brutal bear market years. We returned US$116 million in dividends to our shareholders at Gold Resource, and when I left the Company, we had a very tight capital structure with approximately 70 million shares outstanding. This experience taught us the business plan that we are pursuing today with Fortitude Gold, whereby we target gold equity and yield valuations.

We spun out the Nevada mining unit into Fortitude Gold with the aim of not only producing gold, but creating greater shareholder value, the likes of which we could not do under Gold Resource if we kept both our mining units together. We wanted to transcend being a gold mining company and tap into a pool of capital much bigger than the gold investment space, which chases dividends and yield. Therefore, we engineered Fortitude Gold to have a very tight capital structure, to be a high margin operation and to return a substantial amount of that margin to shareholders in cash dividends. We announced our initial dividend in April of 2021 and raised it three times during the year. Because of this yield focused strategy we have been one of the best performing gold stocks during 2021 when compared with our industry peers in the Junior Gold Miners ETF (GDXJ).

What attracted you to the Walker Lane Mineral Belt?

Under Gold Resource, we spent over four years during the last bear market searching for mining projects across the Americas that met specific criteria. We landed in the Walker Lane of Nevada, and specifically in our area of the Walker Lane, which showed high-grade surface or near-surface gold.  The area checked all our due diligence. We immediately acquired the best ground closing four deals in just fourteen months. We are fortunate to have been one of the first movers during the last bear market. Walker Lane today is far more competitive and we are surrounded by companies such as AngloGold Ashanti, Rio Tinto, i-80 Gold Corp and Endeavour Silver.

What have been the latest updates at Isabella Pearl?

Our flagship Isabella Pearl mine reached first gold production in 2019, 10 months from project groundbreaking. The mine has overperformed, allowing us to pay a higher dividend than we initially expected. We have hit very high-grade gold pockets, one of which was 100 g/t Au. In 2021, we targeted an annual production range of 36,000-40,000 oz gold, but we have increased it to 40,000-45,000 as a function of the deposit overperforming.  On balance, our mine is over 2 g/t Au average.

Can you provide some insight into your ongoing exploration activities?

We have acquired over 10 km of prospective mineralized trend at the Isabella Pearl property and expect to explore targets along this trend. We have hit some high-grade at our Scarlet target nearby Isabella Pearl, and we are currently delineating it.

Golden Mile is our next most advanced property. We recently announced an initial resource of 78,500 indicated ounces and 84,500 inferred ounces. We have completed metallurgical test work, the environmental background studies and are advancing towards a production decision. 

Looking at a bigger picture, a likely place to find a big deposit is at our East Camp Douglas property. It has a large district size land position where several mining companies have drilled high grade veins at the north end. We are observing a lithocap associated with high-grade gold on the south end of the property that we believe has not been explored as such.  This may indicate proximity to an intrusive center and the potential to host a significant gold deposit. We have completed the first round of drilling to look for structure and have already found mineral.

What are Fortitude Gold’s plans for growth?

Ideally, we will grow organically through exploration.  We plan to stay true to our unique business strategy transcending gold equity status and garnering the more valuable yield valuations in the market.

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