The calculation of our cash cost per ounce contained in this press release is a non-GAAP financial measure. Please see "Management's Discussion and Analysis and Results of Operations" contained in the Company’s recently filed Form 10-K for a complete discussion and reconciliation of the non-GAAP measures.

The following Production Statistics table summarize certain information about our operations for the years ended December 31, 2020 and 2019:

		Year ended December 31,
		2020		2019
Ore mined
Ore (tonnes)(1)		643,518		934,723
Gold grade (g/t)		2.42		0.76
Low-grade stockpile (tonnes)
Ore (tonnes)		160,739		529,959
Gold grade (g/t)		0.52		0.51
Pre-strip waste		1,346,316		3,801,302
Waste (tonnes)		4,930,262		703,058
Metal production (before payable metal deductions)(2)
Gold (ozs.)		29,479		10,883
Silver (ozs.)		28,359		9,752

The following Sales Statistics table summarizes certain information about our operations for years ended December 31, 2020 and 2019:

		Year ended December 31,
		2020			2019
Metal sold
Gold (ozs.)			29,929			10,272
Silver (ozs.)			29,129			8,332
Average metal prices realized (1)
Gold ($per oz.)			1,813			1,468
Silver ($per oz.)			21.12			17.04
Precious metal gold equivalent ounces sold
Gold Ounces			29,929			10,272
Gold Equivalent Ounces from Silver			339			97
			30,268			10,369
Total cash cost before by-product credits per gold ounce sold		$	949		$	1,054
Total cash cost after by-product credits per gold ounce sold		$	928		$	1,040
Total all-in sustaining cost per gold ounce sold		$	952		$	1,049

 

Year-End 2020 Proven & Probable Reserve Update

The Company updated its proven and probable (“P&P”) Reserve Report as of December 31, 2020.  Year-end 2020 proven and probable reserves at the Isabella Pearl Mine totaled 1,280,100 tonnes grading 3.88 g/t gold, or 159,600 gold ounces.  In addition, the Company reported low grade stockpile reserves of 582,600 tonnes grading 0.51 g/t gold.  The Isabella Pearl Mine commenced production in April of 2019 with an initial four-year mine life.  Two years later, the current projected mine life of the Isabella Pearl Mine is estimated at three and one-half years.

As of December 31, 2020, our estimate of Proven and Probable (“P&P”) reserves, all of which pertain to the Isabella Pearl Mine, were:

								Precious						Precious
								Metal						Metal
								Gold						Gold
				Gold		Silver		Equivalent		Gold		Silver		Equivalent
Description		Tonnes		g/t		g/t		g/t		Ounces		Ounces		Ounces
Isabella Pearl Mine
Proven		684,500		5.77		39		6.23		126,900		867,200		137,200
Probable		595,600		1.71		10		1.83		32,700		187,800		34,900
Proven and Probable Total		1,280,100		3.88		26		4.18		159,600		1,055,000		172,100
Low-Grade Stockpile		582,600		0.51		3		0.54		9,600		50,700		10,200
Isabella Pearl Mine Total		1,862,700		2.83		18		3.04		169,200		1,105,700		182,300

Notes to the 2020 P&P reserves:

1. Metal prices used for P&P reserves were $1,477 per ounce of gold and $17.47 per ounce of silver. These prices reflect the three-year trailing average prices for gold and silver.
2. Precious metal gold equivalent is 84.54:1 determined by taking gold ounces produced or sold, plus silver ounces produced or sold converted to precious metal gold equivalent ounces using the gold to silver average price ratio for the period.
3. For the Isabella Pearl Mine, the quantities of material within the designed pits were calculated using a cutoff grade of 0.38 Au g/t.
4. Mining, processing, energy, administrative and smelting/refining costs were based on 2020 actual costs for the Isabella Pearl Mine.
5. Metallurgical gold recovery assumptions used for the Isabella Pearl Mine were 81% for all ore which is currently being crushed. These recoveries reflect predicted average recoveries from metallurgical test programs.
6. Isabella Pearl P&P reserves are diluted and factored for expected mining recovery.
7. Figures in tables are rounded to reflect estimate precision and small differences generated by rounding are not material estimates.
8. 100% of the pit constrained Mineralized Material was converted to reserves.

The updated full reserve report will be available on the Company’s website in the near future.

Projects Update

Fortitude Gold successfully ramped up its gold production to targeted levels at its Isabella Pearl Mine in 2020.  The Company is targeting 40,000 ounces of gold (a range of 36,000 to 40,000 gold ounces) during the 2021 production year, assuming no disruptions from the COVID-19 global pandemic or unforeseen operational challenges.

In June 2020, the Company acquired the 9,334-acre Golden Mile property in Mineral County, Nevada.  With the addition of the Golden Mile property, including the staking of 88 additional unpatented claims to expand the land holding to 10,611 acres at Golden Mile, the Company’s Nevada Mining Unit now consist of five high-grade gold properties in south central Nevada’s Walker Lane Mineral Belt covering more than 29,700 acres.  The flagship Isabella Pearl Mine is currently in production, the Golden Mile property is in a resource delineation phase, while the additional three properties are in various stages of exploration.

Exploration Program

The Company’s exploration activities in 2020 included 99 drill holes totaling 6,763 meters at the Isabella Pearl, including in-fill at the Isabella and step-out drilling on the Scarlet and Silica Knob targets. While an initial defined resource at Scarlet was identified, additional drilling at both targets is planned for 2021.

In December of 2020, seven drill holes totaling 2,627 meters were completed at the Golden Mile property.  The Company targets to complete a maiden resource estimate during 2021.  Phase one drill results have been recently received and are currently being analyzed and modeled.

The Company completed 11 drill holes at its East Camp Douglas exploration property in December of 2020 totaling 1,565 meters.  The drilling targeted three initial areas in the lithocap target area: Discovery Breccia, Gypsum Shaft and D2 Cliffs. These potentially mineralized zones are hosted in brecciated and vuggy silicified volcanic rock with a high degree of oxidation.  In 2021, the Company plans additional drill programs to evaluate the resource potential of the gold-bearing silicified volcanic rocks at the lithocap target area.  Results from the maiden drill program at East Camp Douglas are pending and are expected in the coming weeks due to extensive delays at third party assay labs.

In 2021, the Company anticipates spending approximately $5.4 million for exploration activities at its Nevada Mining Unit.  Exploration expenses may be modified depending on exploration results, metal market conditions and available capital.

See Accompanying Tables

The following information summarizes the results of operations for Fortitude Gold Corporation for the years ended December 31, 2020 and 2019, its financial condition as of December 31, 2020 and 2019 and its cash flows for the years ended December 31, 2020 and 2019. The summary data as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019 is derived from its audited financial statements contained in its annual report on Form 10-K for the year ended December 31, 2020, 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)

		December 31,			December 31,
		2020			2019
ASSETS
Current assets:
Cash and cash equivalents		$	27,774		$	866
Accounts receivable			145			—
Inventories			23,051			10,624
Prepaid expenses and other current assets			1,962			319
Total current assets			52,932			11,809
Property, plant and mine development, net			50,990			60,017
Operating lease assets, net			6,198			7,125
Deferred tax assets			959			—
Other non-current assets			1,946			4,985
Total assets		$	113,025		$	83,936
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	1,715		$	5,406
Loans payable, current			665			879
Finance lease liabilities, current			398			438
Operating lease liabilities, current			6,198			7,125
Mining taxes payable			1,001			—
Other current liabilities			1,092			454
Total current liabilities			11,069			14,302
Asset retirement obligations			3,844			2,486
Loans payable, long-term			117			782
Finance lease liabilities, long-term			27			426
Total liabilities			15,057			17,996
Shareholders' equity:
Preferred stock - $0.01 par value, 20,000,000 shares authorized and nil outstanding at December 31, 2020 and nil shares authorized and outstanding at December 31, 2019			—			—
Common stock - $0.01 par value, 200,000,000 shares authorized and 21,211,208 shares outstanding at December 31, 2020 and $0.001 par value, 10,000 shares authorized and outstanding at December 31, 2019			212			—
Additional paid-in capital			99,682			78,083
Accumulated deficit			(1,926)			(12,143)
Total shareholders' equity			97,968			65,940
Total liabilities and shareholders' equity		$	113,025		$	83,936

FORTITUDE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2020 and 2019
(U.S. dollars in thousands, except share and per share amounts)

		Year ended
		December 31,
		2020			2019
Sales, net		$	53,967		$	15,065
Mine cost of sales:
Production costs			27,495			10,664
Depreciation and amortization			10,241			3,884
Reclamation and remediation			48			34
Total mine cost of sales			37,784			14,582
Mine gross profit			16,183			483
Costs and expenses:
General and administrative expenses			2,882			2,375
Exploration expenses			2,648			932
Other expense, net			233			168
Total costs and expenses			5,763			3,475
Income (loss) before income and mining taxes			10,420			(2,992)
Income and mining tax expense			203			—
Net income (loss)		$	10,217		$	(2,992)
Net income (loss) per common share:
Basic and Diluted		$	0.48		$	(299)
Weighted average shares outstanding:
Basic and Diluted			21,211,208			10,000

FORTITUDE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2020 and 2019
(U.S. dollars in thousands)
 

		2020			2019
Cash flows from operating activities:
Net income (loss)		$	10,217		$	(2,992)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization			10,377			4,022
Deferred taxes			(959)			—
Other operating adjustments			48			18
Changes in operating assets and liabilities:
Accounts receivable			(145)			—
Inventories			(2,300)			(6,490)
Prepaid expenses and other current assets			(1,643)			346
Other non-current assets			(2,085)			(3,600)
Accounts payable and other accrued liabilities			(1,508)			3,617
Mining taxes payable			1,001			—
Net cash provided by (used in) operating activities			13,003			(5,079)
Cash flows from investing activities:
Capital expenditures			(6,488)			(22,538)
Net cash used in investing activities			(6,488)			(22,538)
Cash flows from financing activities:
Contributions from GRC			21,711			29,635
Repayment of loans payable			(879)			(812)
Repayment of capital leases			(439)			(410)
Net cash provided by financing activities			20,393			28,413
Net increase in cash and cash equivalents			26,908			796
Cash and cash equivalents at beginning of period			866			70
Cash and cash equivalents at end of period		$	27,774		$	866
Supplemental Cash Flow Information
Interest expense paid		$	86		$	139
Income and mining taxes paid		$	—		$	—
Non-cash investing activities:
Change in capital expenditures in accounts payable		$	(1,544)		$	(1,174)
Change in estimate for asset retirement costs		$	1,159		$	1,726
Stock contributed from Parent		$	100		$	—
Right-of-Use assets acquired through operating lease		$	7,265		$	—
Equipment purchased through loan payable		$	—		$	330
Equipment purchased under finance lease		$	—		$	56

 

About Fortitude Gold Corp.: