Can you tell us about the origins of Fortitude Gold and its unique business model?

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. In fact, we announced our initial dividend in April of 2021 and raised it three times during the year. Because of this yield focused strategy, we were one of the best performing gold stocks during 2021 when compared with our industry peers in the Junior Gold Miners ETF (GDXJ).

What have been the latest updates at Isabella Pearl and what are the future production targets?

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 in the mine, one of which was 100 g/t Au. In 2021 we targeted an annual production range of 36,000-40,000 oz, but we have increased it to 40,000-45,000 oz as a function of the deposit overperforming. On balance, our mine is over 2 g/t average, which is exciting given that many open pits in Nevada have an average gold grade closer to 0.5 g/t.

Our current goal is to maintain an average annual production rate of 40,000 oz. While it would be possible to mine the entire Isabella Pearl deposit much faster, we decided to stretch production out to have enough time to get other mines into production.

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 identify and explore many targets along this trend. More specifically, 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 at Golden Mile 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.

How will you leverage the synergies created between the different projects within the Nevada mining unit?

With our synergistic approach, we hope to utilize the operating Isabella Pearl ADR process plant. We envision future gold projects taking gold to the carbon phase only, then trucking the loaded carbon to the Isabella Pearl’s ADR processing facility for finalize gold dore production. This should greatly lower the capex of future projects we pursue and should shorten permit timing and construction time frames.