Fortitude Gold Corp [FTCO] Filings

10-Q 1 ftco-20240630x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 333-249533

Fortitude Gold Corporation

(Exact name of registrant as specified in its charter)

Colorado

85-2602691

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

2886 Carriage Manor Point

Colorado Springs, CO 80906

(Address of Principal Executive Offices)

(719) 717 9825

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading symbol	Name of Exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	◻	Accelerated filer	◻

Non-accelerated filer	⌧	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of July 29 2024, the registrant had 24,173,209 outstanding shares of common stock.

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TABLE OF CONTENTS

		Page

Part I	Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (Unaudited)	2
	Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2024 and 2023 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited)	4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4.	Controls and Procedures	20
Part II	Other Information
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	21
Item 6.	Exhibits	22
Signatures		23

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PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

FORTITUDE GOLD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands, except per share data)


	June 30,		December 31,
	2024		2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	32,873	$	48,678
Gold and silver rounds/bullion		1,756		1,532
Accounts receivable		527		42
Inventories		15,238		23,848
Prepaid taxes		672		355
Prepaid expenses and other current assets		1,078		811
Total current assets		52,144		75,266
Property, plant and mine development, net		23,883		25,365
Operating lease assets, net		—		631
Deferred tax assets		2,768		2,860
Leach pad inventories		46,334		30,533
Other non-current assets		386		344
Total assets	$	125,515	$	134,999
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	3,010	$	3,881
Operating lease liabilities, current		—		631
Mining taxes payable		207		2,309
Other current liabilities		516		1,133
Total current liabilities		3,733		7,954
Asset retirement obligations		6,796		6,500
Total liabilities		10,529		14,454
Shareholders' equity:
Preferred stock - $0.01 par value, 20,000,000 shares authorized and nil outstanding at June 30, 2024 and December 31, 2023		—		—
Common stock - $0.01 par value, 200,000,000 shares authorized and 24,173,209 shares outstanding at June 30, 2024 and 24,084,542 shares outstanding at December 31, 2023		242		241
Additional paid-in capital		104,396		104,020
Retained earnings		10,348		16,284
Total shareholders' equity		114,986		120,545
Total liabilities and shareholders' equity	$	125,515	$	134,999

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FORTITUDE GOLD CORPORATION
Condensed Consolidated Statements of Operations
(U.S. Dollars in thousands, except per share data)
(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Sales, net	$	9,554	$	19,219	$	17,735	$	40,759
Mine cost of sales:
Production costs		3,130		5,020		5,707		10,673
Depreciation and amortization		1,547		2,905		2,938		6,384
Reclamation and remediation		59		68		107		140
Total mine cost of sales		4,736		7,993		8,752		17,197
Mine gross profit		4,818		11,226		8,983		23,562
Costs and expenses:
General and administrative expenses		1,190		1,087		2,411		2,146
Exploration expenses		4,252		6,061		7,890		9,749
Other (income), net		(539)		(434)		(1,160)		(761)
Total costs and expenses		4,903		6,714		9,141		11,134
(Loss) income before income and mining taxes		(85)		4,512		(158)		12,428
Mining and income tax expense (benefit)		53		908		(18)		2,456
Net (loss) income	$	(138)	$	3,604	$	(140)	$	9,972
Net (loss) income per common share:
Basic	$	(0.01)	$	0.15	$	(0.01)	$	0.41
Diluted	$	(0.01)	$	0.15	$	(0.01)	$	0.41
Weighted average shares outstanding:
Basic		24,165,209		24,084,542		24,150,288		24,074,312
Diluted		24,165,209		24,225,953		24,150,288		24,219,270

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FORTITUDE GOLD CORPORATION
Condensed Consolidated Statements of Shareholders’ Equity
(U.S. Dollars in thousands)
(Unaudited)


	Three Months Ended June 30, 2024 and 2023
		Par
	Number of	Value of						Total
	Common	Common		Additional Paid-			Retained	Shareholders'
	Shares	Shares		in Capital			Earnings	Equity
Balance, March 31, 2023	24,084,542	$	241	$	103,839	$	15,269	$	119,349
Stock-based compensation	—		—		54		—		54
Dividends	—		—		—		(3,854)		(3,854)
Net income	—		—		—		3,604		3,604
Balance, June 30, 2023	24,084,542	$	241	$	103,893	$	15,019	$	119,153

Balance, March 31, 2024	24,161,209	$	242	$	104,150	$	13,386	$	117,778
Stock-based compensation	—		—		246		—		246
Dividends	—		—		—		(2,900)		(2,900)
Common stock issued for vested restricted stock units	12,000		—		—		—		—
Net (loss)	—		—		—		(138)		(138)
Balance, June 30, 2024	24,173,209	$	242	$	104,396	$	10,348	$	114,986


	Six Months Ended June 30, 2024 and 2023
		Par
	Number of	Value of						Total
	Common	Common		Additional Paid-			Retained	Shareholders'
	Shares	Shares		in Capital			Earnings	Equity
Balance, December 31, 2022	24,024,542	$	240	$	103,731	$	11,788	$	115,759
Stock-based compensation	—		—		103		—		103
Dividends	—		—		—		(6,741)		(6,741)
Stock options exercised	60,000		1		59		—		60
Net income	—		—		—		9,972		9,972
Balance, June 30, 2023	24,084,542	$	241	$	103,893	$	15,019	$	119,153

Balance, December 31, 2023	24,084,542	$	241	$	104,020	$	16,284	$	120,545
Stock-based compensation	—		—		300		—		300
Dividends	—		—		—		(5,796)		(5,796)
Stock options exercised	76,667		1		76		—		77
Common stock issued for vested restricted stock units	12,000		—		—		—		—
Net (loss)	—		—		—		(140)		(140)
Balance, June 30, 2024	24,173,209	$	242	$	104,396	$	10,348	$	114,986

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FORTITUDE GOLD CORPORATION
Condensed Consolidated Statements of Cash Flows
(U.S. Dollars in thousands)
(Unaudited)


	Six months ended
	June 30,
	2024		2023
Cash flows from operating activities:
Net (loss) income	$	(140)	$	9,972
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		3,016		6,430
Stock-based compensation		300		103
Deferred taxes		92		(1,018)
Reclamation and remediation accretion		107		140
Unrealized (gain) loss on gold and silver rounds/bullion		(224)		14
Other operating adjustments		—		(72)
Changes in operating assets and liabilities:
Accounts receivable		(485)		—
Inventories		(5,896)		(2,167)
Prepaid expenses and other current assets		(267)		(531)
Other non-current assets		(42)		—
Accounts payable and other accrued liabilities		(1,921)		519
Income and mining taxes payable		(2,419)		(601)
Net cash (used in) provided by operating activities		(7,879)		12,789

Cash flows from investing activities:
Capital expenditures		(2,204)		(3,974)
Purchase of gold and silver rounds/bullion		—		(239)
Net cash used in investing activities		(2,204)		(4,213)

Cash flows from financing activities:
Dividends paid		(5,796)		(6,741)
Proceeds from exercise of stock options		77		60
Repayment of loans payable		(3)		(30)
Repayment of capital leases		—		(6)
Net cash used in financing activities		(5,722)		(6,717)

Net (decrease) increase in cash and cash equivalents		(15,805)		1,859
Cash and cash equivalents at beginning of period		48,678		45,054
Cash and cash equivalents at end of period	$	32,873	$	46,913

Supplemental Cash Flow Information
Income and mining taxes paid	$	2,309	$	4,074
Non-cash investing and financing activities:
Change in capital expenditures in accounts payable	$	436	$	231

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FORTITUDE GOLD CORPORATION
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, unless otherwise stated)
(Unaudited)

1. Basis of Presentation of Financial Statements

These interim Condensed Consolidated Financial Statements (“interim financial statements”) of Fortitude Gold Corporation and its subsidiaries (collectively, the “Company”) are unaudited and have been prepared in accordance with the rules of the Securities and Exchange Commission for interim statements. Certain information and footnote disclosures required by United States Generally Accepted Accounting Principles (“U.S. GAAP”) have been condensed or omitted as permitted by such rules, although the Company believes that the disclosures included are adequate to make the information presented not misleading. The interim financial statements included herein are expressed in United States dollars and in the opinion of management, include all adjustments (all of which are of a normal recurring nature) and disclosures necessary for a fair presentation. The results reported in these interim financial statements are not necessarily indicative of the results that may be reported for the entire year. These interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s annual report on Form 10-K. The year-end balance sheet data were derived from the audited financial statements. Unless otherwise noted, there have been no material changes to the footnotes from the audited consolidated financial statements contained in the Company’s annual report on Form 10-K. All intercompany accounts and transactions have been eliminated in consolidation.

Certain items in the prior period’s Condensed Consolidated Financial Statements have been reclassified to conform to the current presentation.

Refer to Note 2 to the financial statements included in the Company’s 10-K report for the year ended December 31, 2023 for a description of our Significant Accounting Policies.

2. Revenue

The following table presents the Company’s net sales:


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023

	(in thousands)				(in thousands)
Sales, net
Gold sales	$	9,651	$	19,308	$	17,877	$	40,896
Less: Refining charges		(97)		(89)		(142)		(137)
Total sales, net	$	9,554	$	19,219	$	17,735	$	40,759

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3. Gold and Silver Rounds/Bullion

The Company periodically purchases gold and silver rounds/bullion on the open market for treasury diversification and investment purposes.

At June 30, 2024 and December 31, 2023, the Company’s holdings of rounds/bullion, using quoted market prices, consisted of the following:


	June 30,					December 31,
	2024					2023
	Ounces		Per Ounce		Amount	Ounces		Per Ounce		Amount
					(in thousands)					(in thousands)
Gold	628	$	2,331	$	1,465	628	$	2,062	$	1,296
Silver	9,901	$	29.37	$	291	9,931	$	23.79	$	236
Total holdings				$	1,756				$	1,532

4. Inventories

On June 30, 2024 and December 31, 2023, current inventories consisted of the following:


	June 30,		December 31,
	2024		2023

	(in thousands)
Stockpiles	$	3,137	$	3,874
Leach pad		11,767		19,579
Doré		24		22
Subtotal - product inventories		14,928		23,475
Materials and supplies		310		373
Total	$	15,238	$	23,848

In addition to the inventories above, as of June 30, 2024 and December 31, 2023, the Company had $46.3 million and $30.5 million, respectively, of non-current leach pad inventory.

5. Income Taxes

The Company accounts for income taxes in accordance with the provisions of ASC 740, “Income Taxes” (“ASC 740”), on a tax jurisdictional basis. The Company files a consolidated U.S. income tax return and at the federal level its income and losses are taxed at 21%. In addition, a 5% Net Proceeds of Minerals tax applies to the Company’s operations in Nevada, and such tax is recorded as an income tax. The Company recorded an income and mining tax expense of $0.1 million and an income and mining tax benefit of $18.0 thousand for the three and six months ended June 30, 2024, respectively. For the three and six months ended June 30, 2023, the Company recorded an income and mining tax expense of $0.9 million and $2.5 million, respectively. In accordance with ASC 740, the interim provision for taxes was calculated by using the annual effective tax rate. This rate is applied to the year-to-date income before income and mining taxes to determine the income tax expense for the period.

The Company evaluates the evidence available to determine whether a valuation allowance is required on the deferred tax assets. The Company determined that its deferred tax assets were “more likely than not” to be realized as of June 30, 2024 and December 31, 2023, thus no valuation allowance was determined to be necessary.

As of June 30, 2024, the Company believes that it has no liability for uncertain tax positions.

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6. Prepaid Expenses and Other Current Assets

At June 30, 2024 and December 31, 2023, prepaid expenses and other current assets consisted of the following:


	June 30,		December 31,
	2024		2023

	(in thousands)
Contractor advances	$	66	$	100
Prepaid insurance		544		208
Interest receivable		210		355
Other current assets		258		148
Total	$	1,078	$	811

7. Property, Plant and Mine Development, net

At June 30, 2024 and December 31, 2023, property, plant and mine development consisted of the following:


	June 30,		December 31,
	2024		2023

	(in thousands)
Asset retirement costs	$	5,488	$	5,488
Construction-in-progress		14,251		13,615
Furniture and office equipment		752		654
Leach pad and ponds		3,732		3,732
Land		41		41
Light vehicles and other mobile equipment		558		558
Machinery and equipment		17,088		16,547
Process facilities and infrastructure		8,976		8,913
Mineral interests and mineral rights		19,703		18,968
Mine development		24,365		24,365
Software and licenses		346		105
Subtotal ⁽¹⁾		95,300		92,986
Accumulated depreciation and amortization		(71,417)		(67,621)
Total	$	23,883	$	25,365

(1)

Includes capital expenditures in accounts payable of $1.1 million and $0.7 million at June 30, 2024 and December 31, 2023, respectively.

For the three months ended June 30, 2024 and 2023, the Company recorded depreciation and amortization expense of $1.6 million and $2.9 million, respectively. For the six months ended June 30, 2024 and 2023, the Company recorded depreciation and amortization expense of $3.0 million and $6.4 million, respectively.

8. Other Current Liabilities

At June 30, 2024 and December 31, 2023, other current liabilities consisted of the following:


	June 30,		December 31,
	2024		2023

	(in thousands)
Accrued royalty payments	$	303	$	333
Accrued property and excise taxes		210		798
Other accrued expenses		3		2
Total	$	516	$	1,133

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9. Asset Retirement Obligation

The following table presents the changes in the Company’s asset retirement obligation for the six months ended June 30, 2024 and year ended December 31, 2023:


	June 30,		December 31,
	2024		2023

	(in thousands)
Asset retirement obligation – balance at beginning of period	$	6,500	$	5,863
Changes in estimate		—		317
Payments		—		(194)
Accretion		296		514
Asset retirement obligation – balance at end of period	$	6,796	$	6,500

As of June 30, 2024, the Company had a $12.5 million off-balance sheet arrangement for a surety bond. This bond is offset by a $6.8 million asset retirement obligation for future reclamation at the Company’s Isabella Pearl Mine. As of December 31, 2023, the Company had a $12.5 million off-balance sheet arrangement for a surety bond. This bond was offset by a $6.5 million asset retirement obligation for future reclamation at the Company’s Isabella Pearl Mine. The Company’s asset retirement obligations were discounted using a credit adjusted risk-free rate of 11%.

10. Commitments and Contingencies

On June 30, 2024, the Company entered into a contract mining agreement with a new mining contractor relating to mining activities at its Isabella Pearl Mine (“2024 Contract Mining Agreement”). The Company pays the contract miner operational costs in the normal course of business. These costs represent the remaining future contractual payments for the 2024 Contract Mining Agreement over its term. The contractual payments are determined by rates within the 2024 Contract Mining Agreement, estimated tonnes moved and bank cubic yards for drilling and blasting. As of June 30, 2024, total estimated contractual payments remaining are $1.5 million for the year ended December 31, 2024.

11. Leases

Operating Leases

Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases as incurred over the lease term. The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components (e.g., common-area maintenance costs).

The Company had an embedded lease in its Contract Mining Agreement with its previous mining contractor. In November 2022, the Company extended the Contract Mining Agreement for a twelve-month term resulting in the recognition of a $3.8 million right-of-use asset and corresponding $3.8 million operating lease liability. In December 2023, the Company extended the Contract Mining Agreement for a three-month term resulting in the recognition of a $0.6 million right-of-use asset and corresponding $0.6 million operating lease liability. In April 2024, the Company extended the Contract Mining Agreement for a three-month term resulting in the recognition of a $0.7 million right-of-use asset and corresponding $0.7 million operating lease liability. On May 31, 2024, the Contract Mining Agreement was terminated. The Company’s lease payments for its mining equipment embedded lease were determined by tonnage hauled. This embedded lease was within a Contract Mining Agreement entered into for the mining activities at the Company’s Isabella Pearl Mine. The payments, amortization of the right-of-use asset, and interest vary immaterially from forecasted amounts due to variable conditions at the mine. During the three and six months ended June 30, 2024, the Company capitalized variable lease costs of $0.5 million and $0.9 million, respectively, to Inventory. During the three and six months ended June 30, 2023, the Company capitalized variable lease costs of $1.2 million and $2.7 million, respectively, to Inventory.

On June 1, 2024, the Company entered into the 2024 Contract Mining agreement for a term of three-months and is therefore not recognized as an operating lease.

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Supplemental cash flow information related to the Company’s operating lease is as follows for the six months ended June 30, 2024 and 2023:


	Six months ended
	June 30,
	2024		2023

	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,170	$	1,858

12. Other (Income), Net

For the three and six months ended June 30, 2024 and 2023, other income, net consisted of the following:


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023

	(in thousands)				(in thousands)
Interest (income)	$	(448)	$	(469)	$	(976)	$	(831)
Charitable contributions		33		36		46		73
Unrealized (gain) loss from gold and silver rounds/bullion ⁽¹⁾		(121)		14		(224)		14
Other (income)		(3)		(15)		(6)		(17)
Total other (income)	$	(539)	$	(434)	$	(1,160)	$	(761)

(1)

Gains and losses due to changes in fair value are non-cash in nature until such time that they are realized through cash transactions. For additional information regarding the Company’s fair value measurements and investments, please see Note 14.

13. Net (Loss) Income per Common Share

Basic earnings per common share is calculated based on the weighted average number of common shares outstanding for the period. Diluted earnings per common share is calculated based on the assumption that stock options and other dilutive securities outstanding, which have an exercise price less than the average market price of the Company’s common shares during the period, would have been exercised on the later of the beginning of the period or the date granted and that the funds obtained from the exercise were used to purchase common shares at the average market price during the period.

The effect of the Company’s dilutive securities is calculated using the treasury stock method and only those instruments that result in a reduction in net income per common share are included in the calculation. As of June 30, 2024, potentially dilutive securities representing 1,296,000 shares of common stock were excluded from the computation of diluted earnings due to the net loss. As of June 30, 2023, potentially dilutive securities representing 60,000 shares of common stock were excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

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Basic and diluted net (loss) income per common share is calculated as follows:


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Net (loss) income (in thousands)	$	(138)	$	3,604	$	(140)	$	9,972
Basic weighted average shares of common stock outstanding		24,165,209		24,084,542		24,150,288		24,074,312
Diluted effect of share-based awards		—		141,411		—		144,958
Diluted weighted average common shares outstanding		24,165,209		24,225,953		24,150,288		24,219,270
Net (loss) income per share:
Basic	$	(0.01)	$	0.15	$	(0.01)	$	0.41
Diluted	$	(0.01)	$	0.15	$	(0.01)	$	0.41

14. Fair Value Measurement

Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

As required by accounting guidance, assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables set forth certain of the Company’s assets measured at fair value by level within the fair value hierarchy as of June 30, 2024 and December 31, 2023:


	June 30,		December 31,
	2024		2023		Input Hierarchy Level

	(in thousands)
Cash and cash equivalents	$	32,873	$	48,678	Level 1
Gold and silver rounds/bullion		1,756		1,532	Level 1
Accounts receivable		527		42	Level 2

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and cash equivalents consist primarily of cash deposits with an original maturity of 3 months or less and are valued at cost, which approximates fair value. Gold and silver rounds/bullion consist of precious metals used for investment purposes which are valued using quoted market prices. Please see Note 3 for additional information. Accounts receivable includes amounts due to the Company for deliveries of doré sold to customers, which approximates fair value.

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Gains and losses related to changes in the fair value of these financial instruments were included in the Company’s Condensed Consolidated Statements of Operations as shown in the following table:

Three months ended

Six months ended

June 30,

Statement of

2024

2023

2024

2023

Operations Classification

(in thousands)

Unrealized (gain) loss from gold and silver rounds/bullion

(121)

(224)

Other income, net

15. Stock-Based Compensation

The Fortitude Gold Corporation 2020 Equity Incentive Plan (the “Incentive Plan”) allows for the issuance of up to 5 million shares of common stock in the form of incentive and non-qualified stock options, stock appreciation rights, restricted stock units (“RSUs”), stock grants, and stock units. The Company utilizes this Incentive Plan to attract, retain and incentivize staff.

During the three and six months ended June 30, 2024, the Company granted RSUs of 1,100,000 to employees. The RSU’s vest over a period of three years and were issued with a weighted average fair value of $4.59 per share. During the three and six months ended June 30, 2023, the Company granted RSUs of 36,000 to employees. The RSU’s vest over a period of three years and were issued with a weighted average fair value of $7 per share.

During the three and six months ended June 30, 2024, a total of 12,000 RSUs vested, and shares were issued with an intrinsic value of $0.1 million, and a fair value of $0.1 million. No RSUs vested during the three and six months ended June 30, 2023.

During the six months ended June 30, 2024, stock options to purchase an aggregate of 76,667 of the Company’s common stock were exercised at a weighted average exercise price of $1.00 per share. During the six months ended June 30, 2023, stock options to purchase an aggregate of 60,000 of the Company’s common stock were exercised at a weighted average exercise price of $1.00 per share. No stock options were exercised during the three months ended June 30, 2024 and 2023.

Stock-based compensation is included in general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. Stock-based compensation expense for stock options and RSUs is as follows:


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023

	(in thousands)				(in thousands)
Stock options	$	9	$	47	$	42	$	96
Restricted stock units		237		7		258		7
Total	$	246	$	54	$	300	$	103

16. Shareholders’ Equity

During the three and six months ended June 30, 2024, the Company declared and paid dividends of $2.9 million and $0.12 per share and $5.8 million or $0.24 per share, respectively. During the three and six months ended June 30, 2023 the Company declared and paid dividends of $3.9 million or $0.16 per share and $6.7 million or $0.28 per share, respectively.

See Note 15 for information concerning shares and options granted pursuant to the Company's Equity Incentive Plan.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are a Colorado corporation and our subsidiaries are GRC Nevada Inc. (“GRCN”), Walker Lane Minerals Corp. (“WLMC”), County Line Holdings Inc. (“CLH”), County Line Minerals Corp. (“CLMC”), and Golden Mile Minerals Corp. (“GMMC”). WLMC, CLH, CLMC and GMMC are wholly-owned subsidiaries of GRCN. We are a mining company which pursues gold and silver projects that are expected to have both low operating costs and high returns on capital. We are presently focused on mineral production from our Isabella Pearl Mine in Nevada. The ore mined at Isabella Pearl is processed on site at our processing facilities and sold to a refiner as doré, which contains precious metals of gold and silver. We also continue exploration and evaluation work on our portfolio of other precious metal properties in Nevada and continue to evaluate other properties for possible acquisition.

In February 2021, we began trading on the OTC Market “pink sheets” operated by the OTC Markets Group and subsequently up listed to the OTCQB on March 5, 2021 with a symbol change to “FTCO”.

The following discussion summarizes our results of operations for the three and six months ended June 30, 2024 and 2023. It also analyzes our financial condition at June 30, 2024. This discussion should be read in conjunction with the management’s discussion and analysis and the audited consolidated financial statements and footnotes for the year ended December 31, 2023 contained in our annual report on Form 10-K for the year ended December 31, 2023.

The discussion also presents certain financial measures that are not prepared in accordance with U.S. Generally Accepted Accounting Principles (“Non-GAAP”) but which are important to management in its evaluation of our operating results and are used by management to compare our performance with what we perceive to be peer group mining companies and are relied on as part of management’s decision-making process. Management believes these measures may also be important to investors in evaluating our performance. For a detailed description of each of the non-GAAP financial measures, please see the discussion below under Non-GAAP Measures.

See Forward-Looking Statements at the end of this Item 2 for important information regarding statements contained herein.

Second Quarter 2024 Financial Results and Highlights

●

$9.6 million net sales

●

$32.9 million cash balance on June 30, 2024

●

4,150 gold ounces produced

●

$48.4 million working capital at June 30, 2024

●

$4.8 million mine gross profit

●

$4.3 million exploration expenditures

●

$782 total cash cost after by-product credits per gold ounce sold

●

$1,013 per ounce total all-in sustaining cost

●

$2.9 million dividends paid

Table of Contents

Operating Data: The following tables summarize certain information about our operations at our Isabella Pearl Mine for the periods indicated:



	Three months ended June 30,		Six months ended June 30,
	2024	2023	2024	2023
Ore mined
Ore (tonnes)	120,270	112,834	186,766	219,309
Gold grade (g/t)	0.53	3.36	0.59	3.71
Low-grade stockpile
Ore (tonnes)	—	—	—	61,854
Gold grade (g/t)	—	—	—	0.47
Waste (tonnes)	348,488	312,614	799,997	530,741
Metal production (before payable metal deductions)⁽¹⁾
Gold (ozs.)	4,150	9,684	8,133	21,171
Silver (ozs.)	16,178	13,611	37,293	31,260

(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 amounts of metals contained in doré produced and sold.

During the three months ended June 30, 2024 and 2023, we produced 4,150 and 9,684 ounces of gold, respectively. The decreased production in 2024 is primarily due to lower leach pad recoveries due to overall lower-grade ore mined. Mining and placement of ore on the heap leach pad continues to be limited to lower grade ore being mined from the Civit Cat area of the Isabella Pearl deposit and the utilization of the low-grade ore stockpile as we continue to await permit approval to mine deeper in the Pearl pit.

During the six months ended June 30, 2024 and 2023, we produced 8,133 and 21,171 ounces of gold, respectively. The decreased production in 2024 is primarily due to lower leach pad recoveries due to overall lower-grade ore mined. Mining and placement of ore on the heap leach pad continues to be limited to lower grade ore being mined from the Civit Cat area of the Isabella Pearl deposit and the utilization of the low-grade ore stockpile as we continue to await permit approval to mine deeper in the Pearl pit.

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	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Metal sold
Gold (ozs.)		4,123		9,702		8,093		21,131
Silver (ozs.)		15,806		13,464		36,672		30,944
Average metal prices realized ⁽¹⁾
Gold ($per oz.)		2,341		1,990		2,209		1,935
Silver ($per oz.)		29.11		24.46		25.80		23.42
Precious metal gold equivalent ounces sold

Fortitude Gold Corp [FTCO] Filings
10-Q	[2024-07-30]
10-Q	[2024-05-07]
10-K	[2024-02-27]
10-Q	[2023-10-31]
10-Q	[2023-08-01]
10-Q	[2023-05-08]
10-K	[2023-02-28]
10-Q	[2022-11-01]
10-Q	[2022-08-02]
10-Q	[2022-05-04]
10-K	[2022-03-01]
10-Q	[2021-11-02]
10-Q	[2021-08-03]
10-Q	[2021-05-11]
10-K	[2021-03-24]
S-1	[2020-10-19]