Reno Turdites AGXIIK, Renozep and SoCal Steve went on a field trip recently out to the middle of the Nevada desert to see the Isabella Pearl Gold Mine. Fortitude Gold's VP of Corporate Development, Greg Patterson, arranged and accompanied us for the trip. We can confidently say it was quite a day as we spent about six hours in the SUV peppering Greg with questions about Fortitude and mining in general and got another few hours at the site and geological building. All three of us contributed sections to this article so there may be some repetition to what was seen with slight variances to individual perceptions.
Company Background
Fortitude Gold is a small, junior gold miner producing about 40,000 ounces of gold per year the last three years. They have been very profitable during this time and have paid a healthy dividend of $.04 per month. A tight share structure of less that 25 million shares, ticker symbol FTCO. Multiple properties held in Nevada's Walker Lane District include the current Isabella Pearl, with County Line and Golden Mile awaiting permits to begin open pit mining. FTCO has no long term debt, approx $40 million in the bank, and approx 50 thousand ounces of gold sitting on the heap leach pad. All in sustaining costs hovering around $700 per ounce. All kinds of reasons to think this company could be a sure thing.
However, we know there are no sure things in the mining business. Fortitude does face some short term obstacles to sustaining profitability. The significant short term issue is "permitting". As of now, FTCO is nearing the end of the oxide gold production at Isabella Pearl. They're awaiting a permit to mine another 80 feet deeper into the pit. Permitting issues are becoming a problem for many mining companies, as Federal Bureau of Land Management offices are dealing with reduced staffing. Fortitude is also waiting on the permit for the County Line open pit mine where they're expecting to be able to produce gold within a few months of the permit dropping. More recently, FTCO applied for permitting at their Golden Mile property. As of now, the hope is Pearl Deep's permit lands very soon, County Line shortly after and, a little further out timeline, for Golden Mile. Here are a couple links to get into the details if you wish:
https://fortitudegold.com/_resources/presentations/corporate-presentatio...
https://fortitudegold.com/_resources/reports/FTCO-Annual-Report-2023.pdf...
The numbers look very promising for Fortitude and their ability to pay a solid dividend and grow the share price going forward looks very good with one key obstacle. And that's the BLM and permitting time. If Fortitude gets the first two permits without too much delay, it should be full speed ahead with the dividend and stock price showing promising results. If there's lengthy permitting delays, the gap might create production declines that could hurt the ability to pay the dividend and put the stock price under pressure. That 40,000 ounces per year is in jeopardy this year. From what we've seen from management over the years, and the efficient mining crew we witnessed, our confidence level remains high that Fortitude could recover if they were to take a hit from permitting delays.
Fortitude has already purchased most of the equipment and supplies they need to get Golden Mile built. They're ready to dig at County Line once the permit drops. County Line is just a few miles from Isabella Pearl so dirt will be hauled by truck from CL to IP. This will add a bit to costs but FTCO will still be one of the lowest AISC mines in the industry.
On To Our Trip.....Intrepid Turdites Tour a Goldmine
First thanks to SoCal Steve for arranging the mine tour and Fortitude Gold for providing it. We were treated like kings even though we are relatively small shareholders.
The Trip- A Geriatric Goldbug’s Dream
On the balmy morning of June 11th your fearless Turdites departed Reno for the 320 mile roundtrip out into the trackless desert on the Walker Gold Trend in the Great Basin of Central Nevada. Nevada’s Great Basin is the least populated, wildest place left in the contiguous US. It is also the highest, coldest desert in the world. And…we gots lots and lots of gold and silver still in the ground.
The altitude at the mine is 4700 ft. It sits on a sloping plain covered with sage brush, rabbit brush, lizards, ravens, small weathered desert rocks. (Lawrence of Arabia would have appreciated it.) Since Reno was plum out of camels we were driven on our quest by Greg Patterson in a big comfortable SUV provided by Fortitude. We were roughin’ it for sure.
At the Minesite
First stop at the mine was the central office building for obligatory hard hats, steel-toed boots and safety vests. We met staff and were treated to drinks -of the non-alcoholic variety of course. It was here that I may have sensed some slight disappointment on AGX’s part. No Tyrconnell in the boonies will do that to a guy.
Then off about a mile to view the pit itself. This is a BIG place. Puts Parker Schnabel to shame. For us rookies the scale of the whole operation was awesome. Even more so when you consider Fortitude is a relatively small mine compared to the Barrick/Newmont open pits out on the Carlin Trend (NV). This is something you have to experience yourself. Photograpy does not do it justice.
There is an observation point looking down approx 600+ feet into the bottom of the pit. Birds fly around beneath you. A spiraling haul road clings to the sides of the pit. Huge ore trucks crawl up and down the road. The 4-gram per ton red ore at Isabella Pearl that they have been following down into the earth was pointed out. This is rich ore for Nevada. The big open pit/heap leach mines out on the Carlin Trend are profitable at .5/gr per ton. Knowledgeable Fortitude folks were there to answer our questions. We were told this pit will be filled in with dirt from the next mine and the surface re-claimed when Fortitude moves to a nearby claim. This made me happy. There are already enough “scars upon the land” in my beloved Nevada.
Crusher and Gold/Silver Extraction
From the pit we were driven about ½ mile to the crusher area and the nearby three story metallurgical/ore processing building. We toured the building with FTCO’s operators lecturing and answering questions. It was something of a steam punk wet dream. Tanks, cookers, gauges, miles of pipes, valves, a veritable forest of steel. Most fun was the three-story steel staircase to climb at 5000 ft in our steel-toed boots. We all made it to the top. We synthetically planted our make believe TFMR flag. BTW - We must credit that strategy to the COMEX.
Our summiting was photographically documented by FTCO staff. O Ye of little faith … See photo for proof.
How Dirt Becomes a Dore Bar
A long story I don’t understand very well- ** I am fully aware that there are more than a few active and retired professional miners on TFMR. Feel free to correct, criticize, augment what I have said here.
The ore from the pit is crushed to the proper size for efficient leaching as determined by its physical and chemical characteristics. Generally 12-15mm, about the size of an almond. Fortitudes ore is about 80% gold and 20% silver. We viewed Fortitude’s heap /leach pile. The ore is then carried to the top (typically 25 ft high) of the heap pile on conveyor belts. The pile is divided from the top down, like pie slices, into around 8 sections. Perforated piping is laid down. Cyanide solution out of the pipes percolates down through the pile and leaches out the PM’s into solution. Think Starbucks on steroids. The solids are filtered out of the solution. The solution is then pumped through a series of five vats where the PM’s attach to carbon. Hydrofluoric acid and heat are next to remove the PM’s from the carbon.
The gold is then heated and poured into dore bars, typically 50-75% pure. The dore bars are shipped off to the end stage refiners for further purification. Unfortunately, we did not get to see a Fortitude gold pour as the timing was not right for our visit. All the chemicals and carbon are recycled thru the system.
Geology Division
We next visited the geology building and surrounds. It is in the tiny town of Mina, NV about 6 miles from the mine site. Al Turner, Prof. Geologist and VP of Exploration for Fortitude, was our guide and instructor. He spent a good hour showing us drill cores, sampling procedures and the process they use to determine the strategy for further drilling and related exploration. It is quite complicated. He demonstrated great patience with our questions.
My Impressions
My first career was in construction. Boots and tool belt construction from small re-modeling to steel framing on skyscrapers. I saw a lot of job-sites. Mining and construction are first cousins. They both have a look, sound, rhythm when they are well run. They are clean in the highest sense of the word.
We met and interacted with around 15 of Fortitude’s staff, both executives and blue collar miners. All were professionals. No BS detected.
The Bottom Line
This trip was FUN. I learned a lot in a way you can’t get from narratives and pictures on the internet. My confidence in my investment in FTCO was enhanced.
If you get a chance to have a similar tour - do it.
The usual CYA- This is not investment advice. DYODD
What impressed me the most is how Greg and his crew including Lisa, Quentin, Jeff, Mark, and Al (senior Geologist) were excited to see us visit the mine. Their professionalism, strong work ethic and enthusiasm for the tough job of digging gold from the hard rock was impressive.
We're just some interested share holders yet they treated us like royalty. The excitement communicated by each employee was palpable as they described their jobs that are integral to the success of this vital company.
Lisa and Quentin showed us through the plant where every ounce of material, neutral or toxic, that's used to gather gold from the heap leach pads was extracted, recycled or held so that nothing was left to contaminate the environment. We were shown every foot of a huge multi story building set up to filter the gold from the cyanide then separate gold from the chemicals so that nothing harmful escaped.
The 500+ foot deep hole of Isabella Pearl we first peered into will be filled with 10 million tons of rock and base then covered with the original top soil once the last few thousand ounces of gold and silver are extracted. That is a first rate system that makes all federal agencies happy with this good corporate steward who's prime focus is to leave no footprints.
Al, the senior geologist, was a delight to talk with. He was so excited about showing us little flakes and chips of rock that he knew just by looking at them held anywhere from 2 to 10 grams per ton of gold. We didn't get any samples but that was ok.
Al is the real deal with an ability to find the color by walking around Fortitude's claims, kicking dirt and knowing ' gold is in them thar hills. He was excited as a kid in a candy store as he talked about the findings at a couple of nearby mines. One has a lithocap 1 mile wide that 'might' cover 1 million ounces of gold. Permits will be needed to harvest this gold but the northern edge is replete with very decent findings up to and including nuggety pieces. This mother lode could produce for 10 years. One thing remarkable about this zone and its trends is that very little exploration has been done so this area is almost virgin territory (East Camp Douglas).
I am personally adding Fortitude to my Roth IRA and regular cash account as cash allows. This OTC stock trades around $4.75 a share. With almost a 10% dividend it pays the shareholder to sit and wait until things really start popping. This is a stock which could see considerable growth in the next few years. I'd like to go out to the mine this time next year to see how things are working out.
Wrapping Up.....
All three of us came away quite impressed with the mine and especially the people working at the mine. You could just feel the level of commitment they had to the Isabella Pearl property and Fortitude Gold. To see it first hand and realize they're getting .5 to about 4 grams gold per ton of dirt and making it happen with AISC hovering around $700'ish is incredible efficiency. It didn't hurt that each time we asked one of the miner's if they had a stock program as part of the compensation plan, the answer was "yes". When the employee's can participate in the company's success, that's a good thing.
Remember, DO YOUR OWN DUE DILIGENCE. While we're excited about Fortitude's future and we own shares, you must keep in mind we three Turdites are mining investors that have a long list of stock choices that went, whoops, on us. We are optimistic this one will work out with positive results.
