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May 27, 2024
PI Global Investments

Fortitude Gold hits its annual production target

Nevada-based gold producer Fortitude Gold [OTCQB: FTCO] has managed to hit its production target for 2023. The US gold company told investors earlier in 2023 that it aimed to produce between 36,000 and 40,000 gold ounces and it closed the year having produced 37,996 ounces.

Gold prices are trading not far off their all-time high level and although they have edged lower since the start of the year, they are still high at close to $2,030/oz.

The ongoing war in Ukraine, tensions in Israel and most recently Iran’s strikes on targets Iraq and Syria, and Pakistan’s attack on Iranian territory, have created an environment in which gold prices are likely to remain relatively high. Also, the change in the Federal Reserve’s rate strategy will continue affect gold prices as the year progresses.

Fortitude Gold: not just a gold stock

This will play into the hands of Fortitude Gold which is not only a gold play but also a good dividend stock. The US miner’s main operation is located at the Isabella Pearl mine, but it is also actively developing two projects, County Line and Golden Mile, that will eventually feed raw material into the Isabella Pearl processing facility.

“2023 marked another excellent year for our Isabella Pearl operation, delivering low-cost gold production and strong shareholder cash dividends,” said Fortitude Gold’s CEO Jason Reid.

“The Isabella Pearl project to date has exceeded our expectations both in longevity and gold production since our initial production decision and commencement of operations. We currently await Bureau of Land Management approval to mine additional benches of transitional high-grade gold ore below the current permitted pit bottom in the Pearl zone,” Reid added.

Four of the benches in the current zone were scheduled to be mined in the fourth quarter of 2023 and are now targeted for the first quarter of 2024. In the meantime, Fortitude Gold continues to mine ore from the northern Civit Cat zone of the deposit.

County Line awaiting permission

The company’s two other projects County Line and Golden Mile are in the process of obtaining permissions from the Bureau of Land Management. As soon as those are obtained the company plans on starting construction of its County Line mine.

Looking at analysts’ forecast for the gold market this year the wider picture bodes well for Fortitude Gold. J.P. Morgan’s Head of Base and Precious Metals Strategy Gregory Shearer noted that, “Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025”.

While he warned that gold might be vulnerable to another modest retreat in the near-term, as Fed rate cut expectations are now running earlier than previously forecasts,

“Any retracement in the coming months could provide investors with an opportunity to begin positioning for a breakout rally commencing around mid-2024, as US GDP growth slows and expectations of an imminent Fed cutting cycle rise,” Shearer added.

Gold miners like Fortitude Gold will be less sensitive to a short-term movement in the gold price but their annual bottom line will benefit from stronger gold prices over the course of the year.

Fortitude Gold’s full-year financial results for 2023 will be available at the time the company files its Form 10-K with the Securities and Exchange Commission.

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