Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Share Name	Share Symbol	Market	Type
Fortitude Gold Corporation (QB)	USOTC:FTCO	OTCMarkets	Common Stock

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.0725	1.39%	5.27	5.22	5.27	5.40	5.20	5.20	14,336	18:00:36

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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, 2023

☐ 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 31, 2023, the registrant had 24,084,542 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, 2023 (Unaudited) and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (Unaudited)	2
	Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2023 and 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (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	19
Item 4.	Controls and Procedures	19
Part II	Other Information
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	20
Item 6.	Exhibits	21
Signatures		22

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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,
	2023		2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	46,913	$	45,054
Gold and silver rounds/bullion		225		—
Inventories		50,709		47,155
Prepaid taxes		966		710
Prepaid expenses and other current assets		1,261		730
Total current assets		100,074		93,649
Property, plant and mine development, net		28,618		30,581
Operating lease assets, net		2,078		3,826
Deferred tax assets		2,300		1,282
Other non-current assets		341		1,818
Total assets	$	133,411	$	131,156
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	3,619	$	2,524
Operating lease liabilities, current		2,078		3,826
Mining taxes payable		1,512		1,857
Other current liabilities		947		1,324
Total current liabilities		8,156		9,531
Asset retirement obligations		6,102		5,863
Other non-current liabilities		—		3
Total liabilities		14,258		15,397
Shareholders' equity:
Preferred stock - $0.01 par value, 20,000,000 shares authorized and nil outstanding at June 30, 2023 and December 31, 2022		—		—
Common stock - $0.01 par value, 200,000,000 shares authorized and 24,084,542 shares outstanding at June 30, 2023 and 24,024,542 shares outstanding at December 31, 2022		241		240
Additional paid-in capital		103,893		103,731
Retained earnings		15,019		11,788
Total shareholders' equity		119,153		115,759
Total liabilities and shareholders' equity	$	133,411	$	131,156

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,
	2023		2022		2023		2022
Sales, net	$	19,219	$	23,993	$	40,759	$	39,354
Mine cost of sales:
Production costs		5,020		8,189		10,673		13,970
Depreciation and amortization		2,905		4,155		6,384		6,933
Reclamation and remediation		68		76		140		123
Total mine cost of sales		7,993		12,420		17,197		21,026
Mine gross profit		11,226		11,573		23,562		18,328
Costs and expenses:
General and administrative expenses		1,087		1,094		2,146		2,274
Exploration expenses		6,061		2,426		9,749		4,940
Other (income) expense, net		(434)		65		(761)		82
Total costs and expenses		6,714		3,585		11,134		7,296
Income before income and mining taxes		4,512		7,988		12,428		11,032
Mining and income tax expense		908		1,423		2,456		1,849
Net income	$	3,604	$	6,565	$	9,972	$	9,183
Net income per common share:
Basic	$	0.15	$	0.27	$	0.41	$	0.38
Diluted	$	0.15	$	0.27	$	0.41	$	0.38
Weighted average shares outstanding:
Basic		24,084,542		24,024,542		24,074,312		24,010,061
Diluted		24,225,953		24,207,185		24,219,270		24,204,660

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, 2023 and 2022
		Par
	Number of	Value of						Total
	Common	Common		Additional Paid-			Retained	Shareholders'
	Shares	Shares		in Capital			Earnings	Equity
Balance, March 31, 2022	24,024,542	$	240	$	103,586	$	8,370	$	112,196
Stock-based compensation	—		—		50		—		50
Dividends	—		—		—		(2,883)		(2,883)
Net income	—		—		—		6,565		6,565
Balance, June 30, 2022	24,024,542	$	240	$	103,636	$	12,052	$	115,928

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


	Six Months Ended June 30, 2023 and 2022
		Par
	Number of	Value of						Total
	Common	Common		Additional Paid-			Retained	Shareholders'
	Shares	Shares		in Capital			Earnings	Equity
Balance, December 31, 2021	23,961,208	$	240	$	103,476	$	8,632	$	112,348
Stock-based compensation	—		—		97		—		97
Dividends	—		—		—		(5,763)		(5,763)
Stock options exercised	63,334		—		63		—		63
Net income	—		—		—		9,183		9,183
Balance, June 30, 2022	24,024,542	$	240	$	103,636	$	12,052	$	115,928

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

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,
	2023		2022
Cash flows from operating activities:
Net income	$	9,972	$	9,183
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		6,430		7,011
Stock-based compensation		103		97
Deferred taxes		(1,018)		(650)
Reclamation and remediation accretion		140		123
Other operating adjustments		(58)		(29)
Changes in operating assets and liabilities:
Accounts receivable		—		(1,572)
Inventories		(2,167)		(1,068)
Prepaid expenses and other current assets		(531)		1,087
Other non-current assets		—		(31)
Accounts payable and other accrued liabilities		519		176
Income and mining taxes payable		(601)		194
Net cash provided by operating activities		12,789		14,521

Cash flows from investing activities:
Capital expenditures		(3,974)		(8,052)
Other investing activities		(239)		—
Net cash used in investing activities		(4,213)		(8,052)

Cash flows from financing activities:
Dividends paid		(6,741)		(5,763)
Proceeds from exercise of stock options		60		63
Repayment of loans payable		(30)		(43)
Repayment of capital leases		(6)		(13)
Net cash used in financing activities		(6,717)		(5,756)

Net increase in cash and cash equivalents		1,859		713
Cash and cash equivalents at beginning of period		45,054		40,017
Cash and cash equivalents at end of period	$	46,913	$	40,730

Supplemental Cash Flow Information
Income and mining taxes paid	$	4,074	$	2,339
Non-cash investing and financing activities:
Change in capital expenditures in accounts payable	$	231	$	322
Change in estimate for asset retirement costs	$	—	$	517
Right-of-Use assets acquired through operating lease	$	—	$	3,899

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. In the opinion of management, all adjustments (all of which are of a normal recurring nature) and disclosures necessary for a fair presentation of these interim financial statements have been included. 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, 2022 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 those accompanying 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.

2. Revenue

The following table presents the Company’s net sales:


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022

	(in thousands)				(in thousands)
Sales, net
Gold sales	$	19,308	$	24,107	$	40,896	$	39,560
Less: Refining charges		(89)		(114)		(137)		(206)
Total sales, net	$	19,219	$	23,993	$	40,759	$	39,354

3. Gold and Silver Rounds/Bullion

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

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


	June 30,
	2023
	Ounces		Per Ounce		Amount
					(in thousands)
Silver	10,000	$	22.47	$	225
Total holdings				$	225

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As of June 30, 2023, the Company did not have any holdings of gold rounds/bullion. The Company did not have any holdings of rounds/bullion at December 31, 2022.

4. Inventories

On June 30, 2023 and December 31, 2022, current inventories consisted of the following:


	June 30,		December 31,
	2023		2022

	(in thousands)
Stockpiles	$	5,698	$	5,832
Leach pad		44,502		40,786
Doré		—		32
Subtotal - product inventories		50,200		46,650
Materials and supplies		509		505
Total	$	50,709	$	47,155

In addition to the inventories above, as of June 30, 2023 and December 31, 2022, the Company has nil and $1.5 million, respectively, of low-grade ore stockpile inventory included in other non-current assets.

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 income and mining tax expense of $0.9 million and $1.4 million for the three months ended June 30, 2023 and 2022, respectively. The Company recorded income and mining tax expense of $2.5 million and $1.8 million for the six months ended June 30, 2023 and 2022, 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, 2023 and December 31, 2022, thus no valuation allowance was determined to be necessary.

As of June 30, 2023, the Company believes that it has no liability for uncertain tax positions.

6. Prepaid Expenses and Other Current Assets

At June 30, 2023 and December 31, 2022, prepaid expenses and other current assets consisted of the following:


	June 30,		December 31,
	2023		2022

	(in thousands)
Contractor advances	$	81	$	273
Prepaid insurance		557		309
Interest receivable		370		85
Other current assets		253		63
Total	$	1,261	$	730

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7. Property, Plant and Mine Development, net

At June 30, 2023 and December 31, 2022, property, plant and mine development consisted of the following:


	June 30,		December 31,
	2023		2022

	(in thousands)
Asset retirement costs	$	5,171	$	5,171
Construction-in-progress		13,064		9,522
Furniture and office equipment		631		590
Leach pad and ponds		3,732		3,732
Land		38		25
Light vehicles and other mobile equipment		558		544
Machinery and equipment		16,271		15,698
Process facilities and infrastructure		8,863		8,856
Mineral interests and mineral rights		18,953		18,953
Mine development		24,365		24,365
Software and licenses		105		105
Subtotal ⁽¹⁾		91,751		87,561
Accumulated depreciation and amortization		(63,133)		(56,980)
Total	$	28,618	$	30,581

(1)

Includes capital expenditures in accounts payable of $0.8 million and $0.6 million at June 30, 2023 and December 31, 2022, respectively.

For the three months ended June 30, 2023 and 2022, the Company recorded depreciation and amortization expense of $2.9 million and $4.2 million, respectively. For the six months ended June 30, 2023 and 2022, the Company recorded depreciation and amortization expense of $6.4 million and $7.0 million, respectively.

8. Other Current Liabilities

At June 30, 2023 and December 31, 2022, other current liabilities consisted of the following:


	June 30,		December 31,
	2023		2022

	(in thousands)
Accrued royalty payments	$	560	$	547
Accrued property and excise taxes		367		721
Other accrued expenses		20		56
Total	$	947	$	1,324

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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, 2023 and year ended December 31, 2022:


	June 30,		December 31,
	2023		2022

	(in thousands)
Asset retirement obligation – balance at beginning of period	$	5,863	$	4,725
Changes in estimate		—		789
Payments		(18)		(47)
Accretion		257		396
Asset retirement obligation – balance at end of period	$	6,102	$	5,863

As of June 30, 2023, the Company had a $12.5 million off-balance sheet arrangement for a surety bond. This bond is offset by a $6.1 million asset retirement obligation for future reclamation at the Company’s Isabella Pearl Mine. As of December 31, 2022, the Company had a $12.5 million off-balance sheet arrangement for a surety bond. This bond was offset by a $5.9 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

The Company has a Contract Mining Agreement with a mining contractor relating to mining activities at its Isabella Pearl Mine. Included in this Agreement is an embedded lease for the mining equipment for which the Company has recognized a right-of-use asset and corresponding operating lease liability. Please see Note 11 for more information. In addition to the embedded lease payments, the Company pays the contract miner operational costs in the normal course of business. These costs represent the remaining future contractual payments for the Contract Mining Agreement over its term. The contractual payments are determined by rates within the Contract Mining Agreement, estimated tonnes moved and bank cubic yards for drilling and blasting. As of June 30, 2023, total estimated contractual payments remaining, excluding embedded lease payments, are $2.1 million for the year ended December 31, 2023.

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 depreciable life of assets is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The weighted average remaining lease term for the Company’s operating leases as of June 30, 2023 is 0.50 years.

The discount rate implicit within the Company’s leases is generally not determinable and therefore the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for the Company’s leases is determined based on the lease term adjusted for impacts of collateral. The weighted average discount rate used to measure the Company’s operating lease liabilities as of June 30, 2023 was 7.48%.

There are no material residual value guarantees and no restrictions or covenants imposed by the Company’s leases.

The Company has an embedded lease in its Contract Mining Agreement. 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. The Company’s lease payments for its mining equipment embedded lease are determined by tonnage hauled. This embedded lease is 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,

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and interest vary immaterially from forecasted amounts due to variable conditions at the mine. During the three and six months ended June 30, 2023, the Company capitalized variable lease costs of $0.9 million and $1.9 million, respectively, to Inventory. During the three and six months ended June 30, 2022, the Company capitalized variable lease costs of $0.9 million and $2.7 million, respectively, to Inventory.

Maturities of operating lease liabilities as of June 30, 2023 are as follows (in thousands)


Year Ending December 31:
2023	$	2,126
Thereafter		—
Total lease payments		2,126
Less imputed interest		(48)
Present value of minimum payments		2,078
Less: current portion		(2,078)
Long-term portion of minimum payments	$	—

Supplemental cash flow information related to the Company’s operating lease is as follows for the six months ended June 30, 2023 and 2022:


	Six months ended
	June 30,
	2023		2022

	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,858	$	2,660

11. Other (Income) Expense, Net

For the three and six months ended June 30, 2023 and 2022, other (income) expense, net consisted of the following:


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022

	(in thousands)				(in thousands)
Interest (income) expense	$	(469)	$	27	$	(831)	$	44
Charitable contributions		36		41		73		42
Unrealized loss from gold and silver rounds/bullion, net⁽¹⁾		14		—		14		—
Other income		(15)		(3)		(17)		(4)
Total	$	(434)	$	65	$	(761)	$	82

(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 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.

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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, 2023 and 2022, potentially dilutive securities representing 66,000 shares and 60,000 shares, respectively, of common stock were excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

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


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Net income (in thousands)	$	3,604	$	6,565	$	9,972	$	9,183
Basic weighted average shares of common stock outstanding		24,084,542		24,024,542		24,074,312		24,010,061
Diluted effect of share-based awards		141,411		182,643		144,958		194,599
Diluted weighted average common shares outstanding		24,225,953		24,207,185		24,219,270		24,204,660
Net income per share:
Basic	$	0.15	$	0.27	$	0.41	$	0.38
Diluted	$	0.15	$	0.27	$	0.41	$	0.38

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, 2023 and December 31, 2022:


	June 30,		December 31,
	2023		2022		Input Hierarchy Level

	(in thousands)
Cash and cash equivalents	$	46,913	$	45,054	Level 1
Gold and silver rounds/bullion		225		—	Level 1

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.

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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,				June 30,
	2023		2022		2023		2022		Statement of Operations Classification

	(in thousands)
Unrealized gold and silver rounds/bullion loss, net	$	14	$	—	$	14	$	—	Other (income) expense, 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 month 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. No RSUs were granted during the three and six months ended June 30, 2022.

During the six months ended June 30, 2022, the Company issued options to purchase 30,000 shares of its common stock to employees. The options vest over a period of three years. The Company used the Black-Scholes option valuation model to value the options with the following weighted average assumptions: stock price of $7.06, expected term of 3.5 years, risk free rate of 2.06%, expected volatility of 75.87%, and an assumed dividend rate of 7.25%. No options were issued during the three months ended June 30, 2022. No options were issued during the three and six months ended June 30, 2023.

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, 2023. During the six months ended June 30, 2022, stock options to purchase an aggregate of 63,334 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, 2022.

Stock-based compensation is included in general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2023 the Company recorded $0.05 million and $0.1 million, respectively, of stock-based compensation. For the three and six months ended June 30, 2022 the Company recorded $0.05 million and $0.1 million, respectively, of stock-based compensation.

16. Shareholders’ Equity

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. During the three and six months ended June 30, 2022, the Company declared and paid dividends of $2.9 million or $0.12 per share and $5.8 million or $0.24 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 under the ticker symbol "FRTT". Subsequently the symbol was changed to “FTCO”. Our common stock was subsequently up listed to the OTCQB on March 5, 2021.

The following discussion summarizes our results of operations for the three and six months ended June 30, 2023 and 2022. It also analyzes our financial condition at June 30, 2023. 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, 2022 contained in our annual report on Form 10-K for the year ended December 31, 2022.

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 2023 Financial Results and Highlights

●

$19.2 million net sales

●

$3.6 million net income or $0.15 per share

●

$46.9 million cash balance on June 30, 2023

●

9,684 gold ounces produced

●

3.36 grams per tonne average gold grade mined

●

$91.9 million working capital at June 30, 2023

●

$11.2 million mine gross profit

●

$6.1 million exploration expenditures

●

$527 total cash cost after by-product credits per gold ounce sold

●

$680 per ounce total all-in sustaining cost

●

$3.9 million dividends paid

●

$0.04 special dividend

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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,
	2023	2022	2023	2022
Ore mined
Ore (tonnes)	112,834	123,810	219,309	377,653
Gold grade (g/t)	3.36	3.46	3.71	2.59
Low-grade stockpile
Ore (tonnes)	—	11,011	61,854	34,501
Gold grade (g/t)	—	0.42	0.47	0.43
Waste (tonnes)	312,614	241,500	530,741	1,494,024
Metal production (before payable metal deductions)⁽¹⁾
Gold (ozs.)	9,684	10,980	21,171	20,855
Silver (ozs.)	13,611	16,027	31,260	32,550

(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.



	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Metal sold
Gold (ozs.)		9,702		12,851		21,131		21,148
Silver (ozs.)		13,464		18,780		30,944		32,708
Average metal prices realized ⁽¹⁾
Gold ($per oz.)		1,990		1,876		1,935		1,871
Silver ($per oz.)		24.46		23.04		23.42		23.34
Precious metal gold equivalent ounces sold
Gold Ounces		9,702		12,851		21,131		21,148
Gold Equivalent Ounces from Silver		165		231		375		408
		9,867		13,082		21,506		21,556

Total cash cost before by-product credits per gold ounce sold	$	561	$	680	$	546	$	706
Total cash cost after by-product credits per gold ounce sold	$	527	$	646	$	512	$	670
Total all-in sustaining cost per gold ounce sold	$	680	$	733	$	625	$	778

(1)

Average metal prices realized vary from the market metal prices due to final settlement adjustments from our provisional invoices when they are settled. Our average metal prices realized will therefore differ from the market average metal prices in most cases.

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During the three months ended June 30, 2023 and 2022, we produced 9,684 and 10,980 ounces of gold, respectively. The lower production is primarily due to higher utilization of the low-grade stockpile for blending of ore placed on the pad. Cash cost after by-product credit decreased due to lower mining costs due to higher utilization of the low-grade stockpile.

During the six months ended June 30, 2023 and 2022, we produced 21,171 and 20,855 ounces of gold, respectively. The higher production is primarily due to higher-grade ore mined and placed on the pad during the period. Cash cost after by-product credit decreased due to lower mining costs due to less waste mining.

Consolidated Results of Operations – Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Sales, net. For the three months ended June 30, 2023, consolidated sales, net were $19.2 million as compared to $24.0 million for the same period in 2022. The decrease is attributable to a 25% decrease in sales volumes due to decreased production, offset by a 6% increase in average sales price.

Mine gross profit. For the three months ended June 30, 2023, we recorded $11.2 million mine gross profit did not materially change compared to $11.6 million mine gross profit for the same period in 2022.

General and administrative. For the three months ended June 30, 2023, general and administrative expenses of $1.1 million did not materially change from $1.1 million in the same period in 2022.

Exploration expenses. For the three months ending June 30, 2023, property exploration expenses totaled $6.1 million as compared to $2.4 million for the same period of 2022. The increase was largely due to increased drilling at the County Line and Golden Mile properties and the completion of two additional monitoring wells at the Golden Mile property.

Other (income) expense, net. For the three months ending June 30, 2023, other income totaled $0.4 million as compared to other expense of $0.1 million for the same period of 2022. The change is due to an increase in interest income in 2023.

Income and mining tax expense. For the three months ended June 30, 2023, income and mining tax expense was $0.9 million as compared to $1.4 million for the same period in 2022. The decrease is the result of our lower income before income and mining taxes and decreased Nevada net proceeds of minerals tax due to lower metal sales. See Note 5 to the Condensed Consolidated Financial Statements.

Net income. For the three months ended June 30, 2023, we recorded net income of $3.6 million as compared to $6.6 million in the corresponding period for 2022. The decrease is due to the changes in our consolidated results of operations, as discussed above.

Consolidated Results of Operations – Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

Sales, net. For the six months ended June 30, 2023, consolidated sales, net were $40.8 million as compared to $39.4 million for the same period in 2022. The increase is attributable to a 3% increase in average sales price.

Mine gross profit. For the six months ended June 30, 2023, we recorded $23.6 million mine gross profit compared to $18.3 million mine gross profit for the same period in 2022. The increase is primarily attributable to higher sales and lower cash cost after by-product credit per ounce sold, as discussed above.

General and administrative. For the six months ended June 30, 2023, general and administrative expenses of $2.1 million did not materially change from $2.3 million in the same period in 2022.

Exploration expenses. For the six months ending June 30, 2023, property exploration expenses totaled $9.7 million as compared to $4.9 million for the same period of 2022. The increase was largely due to increased drilling, as well as increased geotechnical and metallurgical studies at the County Line property. Drilling also increased at the Golden Mile property, as well as the completion of three additional monitoring wells.

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Other (income) expense, net. For the six months ending June 30, 2023, other income totaled $0.8 million as compared to other expense of $0.1 million for the same period of 2022. The change is due to an increase in interest income in 2023.

Income and mining tax expense. For the six months ended June 30, 2023, income and mining tax expense was $2.5 million as compared to $1.8 million for the same period in 2022. The increase is the result of our higher income before income and mining taxes. See Note 5 to the Condensed Consolidated Financial Statements.

Net income. For the six months ended June 30, 2023, we recorded net income of $10.0 million as compared to $9.2 million in the corresponding period for 2022. The increase is due to the changes in our consolidated results of operations, as discussed above.

Non-GAAP Measures

Throughout this report, we have provided information prepared or calculated according to U.S. GAAP and have referenced some non-GAAP performance measures which we believe will assist with understanding the performance of our business. These measures are based on precious metal gold equivalent ounces sold and include cash cost before by-product credits per ounce, total cash cost after by-product credits per ounce, and total all-in sustaining cost per ounce (“AISC”). Because the non-GAAP performance measures do not have any standardized meaning prescribed by U.S. GAAP, they may not be comparable to similar measures presented by other companies. Accordingly, these measures should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with U.S. GAAP. These non-GAAP measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP.

Revenue generated from the sale of silver is considered a by-product of our gold production for the purpose of our total cash cost after by-product credits for our Isabella Pearl Mine. We periodically review our revenues to ensure that our reporting of primary products and by-products is appropriate. Because we consider silver to be a by-product of our gold production, the value of silver continues to be applied as a reduction to total cash costs in our calculation of total cash cost after by-product credits per precious metal gold equivalent ounce sold. Likewise, we believe the identification of silver as by-product credits is appropriate because of its lower individual economic value compared to gold and since gold is the primary product we produce.

Total cash cost, after by-product credits, is a measure developed by the Gold Institute to provide a uniform standard for comparison purposes. AISC is calculated based on the current guidance from the World Gold Council.

Total cash cost before by-product credits includes all direct and indirect production costs related to our production of metals (including mining, crushing and conveying and other plant facility costs, royalties, and site general and administrative costs) plus treatment and refining costs.

Total cash cost after by-product credits includes total cash cost before by-product credits less by-product credits, or revenues earned from silver.

AISC includes total cash cost after by-product credits plus other costs related to sustaining production, including sustaining allocated general and administrative expenses and sustaining capital expenditures. We determined sustaining capital expenditures as those capital expenditures that are necessary to maintain current production and execute the current mine plan.

Cash cost before by-product credits per ounce, total cash cost after by-product credits per ounce and AISC are calculated by dividing the relevant costs, as determined using the cost elements noted above, by gold ounces sold for the periods presented.

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Reconciliations to U.S. GAAP

The following table provides a reconciliation of total cash cost after by-product credits to total mine cost of sales (a U.S. GAAP measure) as presented in the Consolidated Statements of Operations (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022

	(in thousands)
Total cash cost after by-product credits	$	5,109	$	8,303	$	10,810	$	14,176
Treatment and refining charges		(89)		(114)		(137)		(206)
Depreciation and amortization		2,905		4,155		6,384		6,933
Reclamation and remediation		68		76		140		123
Total consolidated mine cost of sales	$	7,993	$	12,420	$	17,197	$	21,026

The following table presents the non-GAAP measures of total cash cost and AISC:


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022

	(in thousands, except ounces sold and cost per precious metal gold equivalent ounce sold)
Total cash cost before by-product credits ⁽¹⁾	$	5,439	$	8,735	$	11,537	$	14,939
By-product credits ⁽²⁾		(330)		(432)		(727)		(763)
Total cash cost after by-product credits	$	5,109	$	8,303	$	10,810	$	14,176
Sustaining capital expenditures		509		1,025		621		1,963
Sustaining exploration expenses		974		95		1,764		322
Total all-in sustaining cost	$	6,592	$	9,423	$	13,195	$	16,461

Gold ounces sold		9,702		12,851		21,131		21,148

Total cash cost before by-product credits per gold ounce sold	$	561	$	680	$	546	$	706
By-product credits per gold ounce sold⁽²⁾		(34)		(34)		(34)		(36)
Total cash cost after by-product credits per gold ounce sold		527		646		512		670
Other sustaining expenditures per gold ounce sold⁽³⁾		153		87		113		108
Total all-in sustaining cost per gold ounce sold	$	680	$	733	$	625	$	778

(1)

Production cost plus treatment and refining charges.

(2)

Please see the tables below for a summary of our by-product revenue and by-product credit per precious metal equivalent ounces sold.

(3)

Sustaining capital expenditures and sustaining exploration expenses divided by gold ounces sold.

The following tables summarize our by-product revenue and by-product credit gold ounce sold (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
By-product credits by dollar value:
Silver sales	$	330	$	432	$	727	$	763
Total sales from by-products	$	330	$	432	$	727	$	763


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
By-product credits per gold ounce sold:
Silver sales	$	34	$	34	$	34	$	36
Total by-product credits per gold ounce sold	$	34	$	34	$	34	$	36

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Liquidity and Capital Resources

As of June 30, 2023, we had a cash position of $46.9 million compared to $45.1 million at December 31, 2022. The increase is primarily due to increased cash from operations.

As of June 30, 2023, we had working capital of $91.9 million compared to $84.1 million at December 31, 2022. Our working capital balance fluctuates as we use cash to fund our operations, financing and investing activities, including exploration, mine development and income taxes. With our working capital balance as of June 30, 2023, we believe that our liquidity and capital resources are adequate to fund our operations, exploration, capital, and corporate activities for the next twelve months.

Net cash provided by operating activities for the six months ended June 30, 2023 was $12.8 million, compared to $14.5 million for six months ended June 30, 2022. The decrease is primarily due changes in inventory and deferred taxes.

Net cash used in investing activities for the six months ended June 30, 2023 was $4.2 million compared to $8.1 million during the same period in 2022. The decrease is primarily due to less capital expenditures for the Golden Mile project.

Net cash used in financing activities for the six months ended June 30, 2023 of $6.7 million compared to $5.8 million for the same period in 2022. The increase is primarily due to higher shareholder dividends due to special dividend paid in May 2023.

Development and Exploration Activities

Isabella Pearl Mine: During the second quarter, operations continued at the Isabella Pearl Mine open-pit and heap leach operations. Exploration reverse circulation (“RC”) drilling continued in the Plan of Operation footprint of the Isabella Pearl Mine, Scarlet area, and Twin Hills area that are to the northwest of the Isabella Pearl Mine. These drilling programs completed 66 RC holes that totaled 6,821 meters. The focus of these exploration drilling programs was on identifying areas with oxide extractable gold.

County Line property: The County Line Project Plan of Operations and Nevada Reclamation Permit Application was submitted in May 2023 to the U.S. Department of the Interior Bureau of Land Management (“BLM”) and State of Nevada Department of Conservation and Natural Resources Division of Environmental Protection. RC drilling continued in the second quarter to further delineate gold mineralization at the County Line main pit along with mine plan optimization and to test the East Zone pit that included 86 holes, totaling 7,065 meters. In addition, the metallurgical and geotechnical core programs continued that resulted in 12 additional holes being completed that totaled 683 meters. The hydrogeology program advanced with drilling of two holes that will be used for water monitoring.

Golden Mile property: Environmental Assessment permit preparation continued with the goal to submit the Plan of Operations to regulatory authorities in 2023. Additional studies advanced in the second quarter include interpretation of the spectral analytical program results from the RC drill hole chip samples, an independent assessment by a third-party consultant to review sampling, and completion of a seven-hole core program that totaled 825 meters. This core program was designed to further constrain structural and lithological controls associated with gold mineralization. Two additional water monitoring wells were drilled to further assist with planning the proposed phase one open pit.

East Camp Douglas property: Approval of the next phase of RC hole drilling in the Lithocap target area by the Bureau of Land Management, was granted in April 2023. Road building and pad construction are underway; drilling is scheduled for the third quarter. The first phase of a comprehensive surface mapping and sampling program was completed in the northern portion of the East Camp Douglas property. Results from this surface mapping program were used to design a drilling campaign and a Notice of Intent (“NOI”) to drill is in progress for submission to the BLM. Pending approval of this NOI application, drilling is scheduled to commence in the third quarter.

Ripper property: Compilation and interpretation of the 2022 field work and geochemical results from the Ripper property were finalized in the first quarter of 2023. A drilling application with the Bureau of Land Management was completed in the quarter ended June 30, 2023, and environmental studies are currently underway.

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Accounting Developments

Recently issued accounting pronouncements have been evaluated and do not presently impact our financial statements and supplemental data.

Forward-Looking Statements

This report contains or incorporates by reference “forward-looking statements,” as that term is used in federal securities laws, about our financial condition, results of operations and business. These statements include, among others:

●

statements about our future exploration, permitting, production, development, and plans for development of our properties

●

statements concerning the benefits that we expect will result from our business activities and certain transactions that we contemplate or have completed, such as receipt of proceeds, decreased expenses and avoided expenses and expenditures

●

statements of our expectations, beliefs, future plans and strategies, our targets, exploration activities, anticipated developments and other matters that are not historical facts

These statements may be made expressly in this document or may be incorporated by reference from other documents that we will file with the SEC. You can find many of these statements by looking for words such as “believes,” “expects,” “targets,” “anticipates,” “estimates,” or similar expressions used in this report or incorporated by reference in this report.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this report. Further, the information contained in this document or incorporated herein by reference is a statement of our present intention and is based on present facts and assumptions, which may change at any time and without notice, based on changes in such facts or assumptions.

Risk Factors Impacting Forward-Looking Statements

The important factors that could prevent us from achieving our stated goals and objectives include, but are not limited to, those set forth in other reports we have filed with the SEC, including our Form 10-K for the year ended December 31, 2022, and the following:

●

The Biden administration’s current and future stance on resource permitting and development

●

Inflationary pressures and supply chain disruptions, with particular consideration on the outlook for increased costs specific to labor, materials, consumables and fuel and energy on operations

●

Global pandemics such as COVID-19 and governmental responses designed to control the pandemic

●

Changes in the worldwide price for gold and/or silver

●

Volatility in the equities markets

●

Adverse results from our exploration or production efforts

●

Producing at rates lower than those targeted

●

Political and regulatory risks

●

Weather conditions, including unusually heavy rains

●

Earthquakes or other unforeseen ground movements impacting mining or processing

●

Failure to meet our revenue or profit goals or operating budget

●

Technological innovations by competitors or in competing technologies

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●

Cybersecurity threats

●

Investor perception of our industry or our prospects

●

Lawsuits

●

General economic trends

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Smaller Reporting Companies are not required to provide the information required by this item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 15d-15 under the 1934 Act, as of June 30, 2023, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer). Based upon and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2023.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the 1934 Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the 1934 Act) during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Smaller Reporting Companies are not required to provide the information for this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 4. Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Quarterly Report.

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Item 5. Other Information

None.

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Item 6. Exhibits

The following exhibits are filed or furnished herewith.


Exhibit Number		Description

3.1		Articles of Incorporation (1)
3.2		Bylaws of the Company (1)
4.1.1		Equity Incentive Plan (1)
4.1.2		Form of Stock Option Award Agreement (1)
4.1.3		Form of RSU Award Agreement (1)
4.2		Shareholder Rights Agreement (1)
10.1		Separation Agreement (1)
10.2		Management Service Agreement (1)
10.3		Reserved
10.4		Contract Mining Agreement (1)
10.5		Employment Agreement with Jason D. Reid (2)
10.6		Employment Agreement with Gregory A. Patterson (2)
10.7		Employment Agreement with Barry D. Devlin (2)
10.8		Employment Agreement with John A. Labate (2)
14		Code of Ethics (1)
21		Subsidiaries (3)
31.1*		Certification of Chief Executive Officer Pursuant to Rule 13a-15(e) or Rule 15d-15(e)
31.2*		Certification of Chief Financial Officer Pursuant to Rule 13a-15(e) or Rule 15d-15(e)
32*		Certification of Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350
95*		Mine Safety Disclosures
101*		Financial statements from the Quarterly Report on Form 10-Q of Fortitude Gold Corporation for the three and six months ended June 30, 2023, formatted in inline XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Changes in Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements.
104		Cover Page Interactive Data File (embedded within the XBRL document)

(1) Incorporated by reference to the same exhibit filed with the Company's registration statement on Form S-1 (File No. 333-249533).

(2) Incorporated by reference to same exhibit filed with the Company's 8-K report dated March 1, 2021 (File No. 333-249533).

(3) Incorporated by reference to same exhibit filed with the Company's 10-K/A report dated December 15, 2022 (File No. 333-249533).

*Filed with this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 1, 2023.


	FORTITUDE GOLD CORPORATION

	By:	/s/ Jason D. Reid
	Name:	Jason D. Reid
	Title:	Chief Executive Officer and President

	By:	/s/ John A. Labate
	Name:	John A. Labate
	Title:	Chief Financial Officer

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Jason D. Reid, certify that:

I have reviewed this quarterly report on Form 10-Q of Fortitude Gold Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2023



	By:	/s/ Jason D. Reid
	Name:	Jason D. Reid
	Title:	Chief Executive Officer and President

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, John A. Labate, certify that:

I have reviewed this quarterly report on Form 10-Q of Fortitude Gold Corporation;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2023

J.

	By:	/s/ John A. Labate
	Name:	John A. Labate
	Title:	Chief Financial Officer

Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Fortitude Gold Corporation (the “Company”) on Form 10-Q for the three month period ended June 30, 2023 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, we, Jason D. Reid, Chief Executive Officer and President, and John A. Labate, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 1, 2023




	By:	/s/ Jason D. Reid
	Name:	Jason D. Reid
	Title:	Chief Executive Officer and President

	By:	/s/ John A. Labate
	Name:	John A. Labate
	Title:	Chief Financial Officer

Exhibit 95

The following disclosures are provided pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) and Item 104 of Regulation S-K, which require certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934, as amended, that operate mines regulated under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). The disclosures reflect our U.S. mining operations only as the requirements of the Act and Item 104 of Regulation S-K do not apply to our mines operated outside the United States.

Mine Safety Information. Whenever the Federal Mine Safety and Health Administration (“MSHA”) believes a violation of the Mine Act, any health or safety standard or any regulation has occurred, it may issue a citation which describes the alleged violation and fixes a time within which the U.S. mining operator (e.g. our subsidiary, Walker Lane Minerals Corp.) must abate the alleged violation. In some situations, such as when MSHA believes that conditions pose a hazard to miners, MSHA may issue an order removing miners from the area of the mine affected by the condition until the alleged hazards are corrected. When MSHA issues a citation or order, it generally proposes a civil penalty, or fine, as a result of the alleged violation, that the operator is ordered to pay. Citations and orders can be contested and appealed, and as part of that process, are often reduced in severity and amount, and are sometimes dismissed. The number of citations, orders and proposed assessments vary depending on the size and type (underground or surface) of the mine as well as by the MSHA inspector(s) assigned. In addition to civil penalties, the Mine Act also provides for criminal penalties for an operator who willfully violates a health or safety standard or knowingly violates or fails or refuses to comply with an order issued under Section 107(a) or any final decision issued under the Act.

The below table reflects citations and orders issued to us by MSHA during the three months ended June 30, 2023. The proposed assessments for the three months ended June 30, 2023 were taken from the MSHA data retrieval system as of July 25, 2023.

Additional information about the Act and MSHA references used in the table follows:

●

Section 104(a) S&S Citations: Citations received from MSHA under section 104(a) of the Mine Act for violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard.

●

Section 104(b) Orders: Orders issued by MSHA under section 104(b) of the Mine Act, which represents a failure to abate a citation under section 104(a) within the period of time prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.

●

Section 104(d) S&S Citations and Orders: Citations and orders issued by MSHA under section 104(d) of the Mine Act for unwarrantable failure to comply with mandatory, significant and substantial health or safety standards.

●

Section 110(b)(2) Violations: Flagrant violations issued by MSHA under section 110(b)(2) of the Mine Act.

●

Section 107(a) Orders: Orders issued by MSHA under section 107(a) of the Mine Act for situations in which MSHA determined an “imminent danger” (as defined by MSHA) existed.



	Mine or Operation⁽¹⁾
	Isabella Pearl Mine
	MSHA ID #2602812
Total # of "Significant and Substantial" Violations Under §104(a)		-
Total # of Orders Issued Under §104(b)		-
Total # of Citations and Orders Issued Under §104(d)		-
Total # of Flagrant Violations Under §110(b)(2)		-
Total # of Imminent Danger Orders Under §107(a)		-
Total Amount of Proposed Assessments from MSHA under the Mine Act	$	-
Total # of Mining-Related Fatalities		-
Received Notice of Pattern of Violations under Section 104(e)		No
Received Notice of Potential to have Patterns under Section 104(e)		No
Pending Legal Actions		-
Legal Actions Instituted		-
Legal Actions Resolved		-

(1)

MSHA assigns an identification number to each mine or operation and may or may not assign separate identification numbers to related facilities. The definition of “mine” under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting minerals, such as land, structures, facilities, equipment, machines, tools, and minerals preparation facilities.

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2023	Jul. 31, 2023
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	333-249533
Entity Registrant Name	Fortitude Gold Corporation
Entity Incorporation, State or Country Code	CO
Entity Tax Identification Number	85-2602691
Entity Address, Address Line One	2886 Carriage Manor Point
Entity Address, City or Town	Colorado Springs
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80906
City Area Code	719
Local Phone Number	717 9825
Title of 12(b) Security	N/A
Trading Symbol	N/A
Security Exchange Name	NONE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		24,084,542
Entity Central Index Key	0001828377
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 46,913	$ 45,054
Gold and silver rounds/bullion	225
Inventories	50,709	47,155
Prepaid taxes	966	710
Prepaid expenses and other current assets	1,261	730
Total current assets	100,074	93,649
Property, plant and mine development, net	28,618	30,581
Operating lease assets, net	2,078	3,826
Deferred tax assets	2,300	1,282
Other non-current assets	341	1,818
Total assets	133,411	131,156
Current liabilities:
Accounts payable	3,619	2,524
Operating lease liabilities, current	2,078	3,826
Mining taxes payable	1,512	1,857
Other current liabilities	947	1,324
Total current liabilities	8,156	9,531
Asset retirement obligations	6,102	5,863
Other non-current liabilities		3
Total liabilities	14,258	15,397
Shareholders' equity:
Preferred stock - $0.01 par value, 20,000,000 shares authorized and nil outstanding at June 30, 2023 and December 31, 2022
Common stock - $0.01 par value, 200,000,000 shares authorized and 24,084,542 shares outstanding at June 30, 2023 and 24,024,542 shares outstanding at December 31, 2022	241	240
Additional paid-in capital	103,893	103,731
Retained earnings	15,019	11,788
Total shareholders' equity	119,153	115,759
Total liabilities and shareholders' equity	$ 133,411	$ 131,156

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	20,000,000	20,000,000
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	200,000,000	200,000,000
Common stock, outstanding (in shares)	24,084,542	24,024,542

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Sales, net	$ 19,219	$ 23,993	$ 40,759	$ 39,354
Mine cost of sales:
Production costs	5,020	8,189	10,673	13,970
Depreciation and amortization	2,905	4,155	6,384	6,933
Reclamation and remediation	68	76	140	123
Total mine cost of sales	7,993	12,420	17,197	21,026
Mine gross profit	11,226	11,573	23,562	18,328
Costs and expenses:
General and administrative expenses	1,087	1,094	2,146	2,274
Exploration expenses	6,061	2,426	9,749	4,940
Other (income) expense, net	(434)	65	(761)	82
Total costs and expenses	6,714	3,585	11,134	7,296
Income before income and mining taxes	4,512	7,988	12,428	11,032
Mining and income tax expense	908	1,423	2,456	1,849
Net income	$ 3,604	$ 6,565	$ 9,972	$ 9,183
Net income per common share
Net income per common share, Basic	$ 0.15	$ 0.27	$ 0.41	$ 0.38
Net income per common share, Diluted	$ 0.15	$ 0.27	$ 0.41	$ 0.38
Weighted average shares outstanding
Weighted average shares outstanding, Basic	24,084,542	24,024,542	24,074,312	24,010,061
Weighted average shares outstanding, Diluted	24,225,953	24,207,185	24,219,270	24,204,660

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common shares	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Total
Balance, at Beginning of period at Dec. 31, 2021	$ 240	$ 103,476	$ 8,632	$ 112,348
Balance, at Beginning of period (in shares) at Dec. 31, 2021	23,961,208
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		97		97
Dividends			(5,763)	(5,763)
Stock options exercised		63		63
Stock options exercised (in shares)	63,334
Net income			9,183	9,183
Balance, at End of period at Jun. 30, 2022	$ 240	103,636	12,052	115,928
Balance, at End of period (in shares) at Jun. 30, 2022	24,024,542
Balance, at Beginning of period at Mar. 31, 2022	$ 240	103,586	8,370	112,196
Balance, at Beginning of period (in shares) at Mar. 31, 2022	24,024,542
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		50		50
Stock-based compensation (in shares)	0
Dividends			(2,883)	(2,883)
Net income			6,565	6,565
Balance, at End of period at Jun. 30, 2022	$ 240	103,636	12,052	115,928
Balance, at End of period (in shares) at Jun. 30, 2022	24,024,542
Balance, at Beginning of period at Dec. 31, 2022	$ 240	103,731	11,788	115,759
Balance, at Beginning of period (in shares) at Dec. 31, 2022	24,024,542
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		103		103
Dividends			(6,741)	(6,741)
Stock options exercised	$ 1	59		60
Stock options exercised (in shares)	60,000
Net income			9,972	9,972
Balance, at End of period at Jun. 30, 2023	$ 241	103,893	15,019	119,153
Balance, at End of period (in shares) at Jun. 30, 2023	24,084,542
Balance, at Beginning of period at Mar. 31, 2023	$ 241	103,839	15,269	119,349
Balance, at Beginning of period (in shares) at Mar. 31, 2023	24,084,542
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		54		54
Stock-based compensation (in shares)	0
Dividends			(3,854)	(3,854)
Net income			3,604	3,604
Balance, at End of period at Jun. 30, 2023	$ 241	$ 103,893	$ 15,019	$ 119,153
Balance, at End of period (in shares) at Jun. 30, 2023	24,084,542

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income	$ 9,972	$ 9,183
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	6,430	7,011
Stock-based compensation	103	97
Deferred taxes	(1,018)	(650)
Reclamation and remediation accretion	140	123
Other operating adjustments	(58)	(29)
Changes in operating assets and liabilities:
Accounts receivable		(1,572)
Inventories	(2,167)	(1,068)
Prepaid expenses and other current assets	(531)	1,087
Other non-current assets		(31)
Accounts payable and other accrued liabilities	519	176
Income and mining taxes payable	(601)	194
Net cash provided by operating activities	12,789	14,521
Cash flows from investing activities:
Capital expenditures	(3,974)	(8,052)
Other investing activities	(239)
Net cash used in investing activities	(4,213)	(8,052)
Cash flows from financing activities:
Dividends paid	(6,741)	(5,763)
Proceeds from exercise of stock options	60	63
Repayment of loans payable	(30)	(43)
Repayment of capital leases	(6)	(13)
Net cash used in financing activities	(6,717)	(5,756)
Net increase in cash and cash equivalents	1,859	713
Cash and cash equivalents at beginning of period	45,054	40,017
Cash and cash equivalents at end of period	46,913	40,730
Supplemental Cash Flow Information
Income and mining taxes paid	4,074	2,339
Non-cash investing and financing activities:
Change in capital expenditures in accounts payable	$ 231	322
Change in estimate for asset retirement costs		517
Right-of-Use assets acquired through operating lease		$ 3,899

Basis of Presentation of Financial Statements

6 Months Ended

Jun. 30, 2023

Basis of Presentation of Financial Statements

Basis of Presentation of Financial Statements

1. Basis of Presentation of Financial Statements

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

Revenue

6 Months Ended

Jun. 30, 2023

Revenue

Revenue

2. Revenue

The following table presents the Company’s net sales:


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022

	(in thousands)				(in thousands)
Sales, net
Gold sales	$	19,308	$	24,107	$	40,896	$	39,560
Less: Refining charges		(89)		(114)		(137)		(206)
Total sales, net	$	19,219	$	23,993	$	40,759	$	39,354

Gold and Silver Rounds/Bullion

6 Months Ended

Jun. 30, 2023

Gold and Silver Rounds/Bullion

Gold and Silver Rounds/Bullion

3. Gold and Silver Rounds/Bullion

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

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


	June 30,
	2023
	Ounces		Per Ounce		Amount
					(in thousands)
Silver	10,000	$	22.47	$	225
Total holdings				$	225

As of June 30, 2023, the Company did not have any holdings of gold rounds/bullion. The Company did not have any holdings of rounds/bullion at December 31, 2022.

Inventories

6 Months Ended

Jun. 30, 2023

Inventories

Inventories

4. Inventories

On June 30, 2023 and December 31, 2022, current inventories consisted of the following:


	June 30,		December 31,
	2023		2022

	(in thousands)
Stockpiles	$	5,698	$	5,832
Leach pad		44,502		40,786
Doré		—		32
Subtotal - product inventories		50,200		46,650
Materials and supplies		509		505
Total	$	50,709	$	47,155

Income Taxes

6 Months Ended

Jun. 30, 2023

Income Taxes

Income Taxes

5. Income Taxes

As of June 30, 2023, the Company believes that it has no liability for uncertain tax positions.

Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2023

Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

6. Prepaid Expenses and Other Current Assets

At June 30, 2023 and December 31, 2022, prepaid expenses and other current assets consisted of the following:


	June 30,		December 31,
	2023		2022

	(in thousands)
Contractor advances	$	81	$	273
Prepaid insurance		557		309
Interest receivable		370		85
Other current assets		253		63
Total	$	1,261	$	730

Property, Plant and Mine Development, net

6 Months Ended

Jun. 30, 2023

Property, Plant and Mine Development, net

Property, Plant and Mine Development, net

7. Property, Plant and Mine Development, net

At June 30, 2023 and December 31, 2022, property, plant and mine development consisted of the following:


	June 30,		December 31,
	2023		2022

	(in thousands)
Asset retirement costs	$	5,171	$	5,171
Construction-in-progress		13,064		9,522
Furniture and office equipment		631		590
Leach pad and ponds		3,732		3,732
Land		38		25
Light vehicles and other mobile equipment		558		544
Machinery and equipment		16,271		15,698
Process facilities and infrastructure		8,863		8,856
Mineral interests and mineral rights		18,953		18,953
Mine development		24,365		24,365
Software and licenses		105		105
Subtotal ⁽¹⁾		91,751		87,561
Accumulated depreciation and amortization		(63,133)		(56,980)
Total	$	28,618	$	30,581

(1)

Includes capital expenditures in accounts payable of $0.8 million and $0.6 million at June 30, 2023 and December 31, 2022, respectively.

Other Current Liabilities

6 Months Ended

Jun. 30, 2023

Other Current Liabilities

Other Current Liabilities

8. Other Current Liabilities

At June 30, 2023 and December 31, 2022, other current liabilities consisted of the following:


	June 30,		December 31,
	2023		2022

	(in thousands)
Accrued royalty payments	$	560	$	547
Accrued property and excise taxes		367		721
Other accrued expenses		20		56
Total	$	947	$	1,324

Asset Retirement Obligation

6 Months Ended

Jun. 30, 2023

Asset Retirement Obligation

Asset Retirement Obligation

9. Asset Retirement Obligation

The following table presents the changes in the Company’s asset retirement obligation for the six months ended June 30, 2023 and year ended December 31, 2022:


	June 30,		December 31,
	2023		2022

	(in thousands)
Asset retirement obligation – balance at beginning of period	$	5,863	$	4,725
Changes in estimate		—		789
Payments		(18)		(47)
Accretion		257		396
Asset retirement obligation – balance at end of period	$	6,102	$	5,863

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies

Commitments and Contingencies

10. Commitments and Contingencies

Leases

6 Months Ended

Jun. 30, 2023

Leases

Leases

11. Leases

Operating Leases

There are no material residual value guarantees and no restrictions or covenants imposed by the Company’s leases.

Maturities of operating lease liabilities as of June 30, 2023 are as follows (in thousands)


Year Ending December 31:
2023	$	2,126
Thereafter		—
Total lease payments		2,126
Less imputed interest		(48)
Present value of minimum payments		2,078
Less: current portion		(2,078)
Long-term portion of minimum payments	$	—

Supplemental cash flow information related to the Company’s operating lease is as follows for the six months ended June 30, 2023 and 2022:


	Six months ended
	June 30,
	2023		2022

	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,858	$	2,660

Other (Income) Expense, Net

6 Months Ended

Jun. 30, 2023

Other (Income) Expense, Net

Other (Income) Expense, Net

11. Other (Income) Expense, Net

For the three and six months ended June 30, 2023 and 2022, other (income) expense, net consisted of the following:


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022

	(in thousands)				(in thousands)
Interest (income) expense	$	(469)	$	27	$	(831)	$	44
Charitable contributions		36		41		73		42
Unrealized loss from gold and silver rounds/bullion, net⁽¹⁾		14		—		14		—
Other income		(15)		(3)		(17)		(4)
Total	$	(434)	$	65	$	(761)	$	82

(1)

Net Income per Common Share

6 Months Ended

Jun. 30, 2023

Net Income per Common Share

Net Income per Common Share

13. Net Income per Common Share

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


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Net income (in thousands)	$	3,604	$	6,565	$	9,972	$	9,183
Basic weighted average shares of common stock outstanding		24,084,542		24,024,542		24,074,312		24,010,061
Diluted effect of share-based awards		141,411		182,643		144,958		194,599
Diluted weighted average common shares outstanding		24,225,953		24,207,185		24,219,270		24,204,660
Net income per share:
Basic	$	0.15	$	0.27	$	0.41	$	0.38
Diluted	$	0.15	$	0.27	$	0.41	$	0.38

Fair Value Measurement

6 Months Ended

Jun. 30, 2023

Fair Value Measurement

Fair Value Measurement

14. Fair Value Measurement

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).


	June 30,		December 31,
	2023		2022		Input Hierarchy Level

	(in thousands)
Cash and cash equivalents	$	46,913	$	45,054	Level 1
Gold and silver rounds/bullion		225		—	Level 1

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

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,				June 30,
	2023		2022		2023		2022		Statement of Operations Classification

	(in thousands)
Unrealized gold and silver rounds/bullion loss, net	$	14	$	—	$	14	$	—	Other (income) expense, net

Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Stock-Based Compensation

Stock-Based Compensation

15. Stock-Based Compensation

Shareholders' Equity

6 Months Ended

Jun. 30, 2023

Shareholders' Equity

Shareholders' Equity

16. Shareholders’ Equity

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

Revenue (Tables)

6 Months Ended

Jun. 30, 2023

Revenue

Schedule of company's net sales disaggregated by source


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022

	(in thousands)				(in thousands)
Sales, net
Gold sales	$	19,308	$	24,107	$	40,896	$	39,560
Less: Refining charges		(89)		(114)		(137)		(206)
Total sales, net	$	19,219	$	23,993	$	40,759	$	39,354

Gold and Silver Rounds/Bullion (Tables)

6 Months Ended

Jun. 30, 2023

Gold and Silver Rounds/Bullion

Summary of investment holdings


	June 30,
	2023
	Ounces		Per Ounce		Amount
					(in thousands)
Silver	10,000	$	22.47	$	225
Total holdings				$	225

Inventories (Tables)

6 Months Ended

Jun. 30, 2023

Inventories

Schedule of current inventories


	June 30,		December 31,
	2023		2022

	(in thousands)
Stockpiles	$	5,698	$	5,832
Leach pad		44,502		40,786
Doré		—		32
Subtotal - product inventories		50,200		46,650
Materials and supplies		509		505
Total	$	50,709	$	47,155

Prepaid Expenses and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2023

Prepaid Expenses and Other Current Assets

Schedule of prepaid expenses and other current assets


	June 30,		December 31,
	2023		2022

	(in thousands)
Contractor advances	$	81	$	273
Prepaid insurance		557		309
Interest receivable		370		85
Other current assets		253		63
Total	$	1,261	$	730

Property, Plant and Mine Development, net (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Mine Development, net

Schedule of property, plant and mine development


	June 30,		December 31,
	2023		2022

	(in thousands)
Asset retirement costs	$	5,171	$	5,171
Construction-in-progress		13,064		9,522
Furniture and office equipment		631		590
Leach pad and ponds		3,732		3,732
Land		38		25
Light vehicles and other mobile equipment		558		544
Machinery and equipment		16,271		15,698
Process facilities and infrastructure		8,863		8,856
Mineral interests and mineral rights		18,953		18,953
Mine development		24,365		24,365
Software and licenses		105		105
Subtotal ⁽¹⁾		91,751		87,561
Accumulated depreciation and amortization		(63,133)		(56,980)
Total	$	28,618	$	30,581

(1)

Includes capital expenditures in accounts payable of $0.8 million and $0.6 million at June 30, 2023 and December 31, 2022, respectively.

Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Other Current Liabilities

Schedule of other current liabilities


	June 30,		December 31,
	2023		2022

	(in thousands)
Accrued royalty payments	$	560	$	547
Accrued property and excise taxes		367		721
Other accrued expenses		20		56
Total	$	947	$	1,324

Asset Retirement Obligation (Tables)

6 Months Ended

Jun. 30, 2023

Asset Retirement Obligation

Schedule of asset retirement obligation


	June 30,		December 31,
	2023		2022

	(in thousands)
Asset retirement obligation – balance at beginning of period	$	5,863	$	4,725
Changes in estimate		—		789
Payments		(18)		(47)
Accretion		257		396
Asset retirement obligation – balance at end of period	$	6,102	$	5,863

Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases

Schedule of operating lease maturities


Year Ending December 31:
2023	$	2,126
Thereafter		—
Total lease payments		2,126
Less imputed interest		(48)
Present value of minimum payments		2,078
Less: current portion		(2,078)
Long-term portion of minimum payments	$	—

Schedule of supplemental cash flow information of leases.


	Six months ended
	June 30,
	2023		2022

	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,858	$	2,660

Other (Income) Expense, Net (Tables)

6 Months Ended

Jun. 30, 2023

Other (Income) Expense, Net

Schedule of other expense, net


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022

	(in thousands)				(in thousands)
Interest (income) expense	$	(469)	$	27	$	(831)	$	44
Charitable contributions		36		41		73		42
Unrealized loss from gold and silver rounds/bullion, net⁽¹⁾		14		—		14		—
Other income		(15)		(3)		(17)		(4)
Total	$	(434)	$	65	$	(761)	$	82

(1)

Net Income per Common Share (Tables)

6 Months Ended

Jun. 30, 2023

Net Income per Common Share

Schedule of basic and diluted net income per common share


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Net income (in thousands)	$	3,604	$	6,565	$	9,972	$	9,183
Basic weighted average shares of common stock outstanding		24,084,542		24,024,542		24,074,312		24,010,061
Diluted effect of share-based awards		141,411		182,643		144,958		194,599
Diluted weighted average common shares outstanding		24,225,953		24,207,185		24,219,270		24,204,660
Net income per share:
Basic	$	0.15	$	0.27	$	0.41	$	0.38
Diluted	$	0.15	$	0.27	$	0.41	$	0.38

Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Measurement

Schedule of assets and liabilities measured at fair value


	June 30,		December 31,
	2023		2022		Input Hierarchy Level

	(in thousands)
Cash and cash equivalents	$	46,913	$	45,054	Level 1
Gold and silver rounds/bullion		225		—	Level 1

Schedule of gains and losses related to changes in the fair value


	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022		Statement of Operations Classification

	(in thousands)
Unrealized gold and silver rounds/bullion loss, net	$	14	$	—	$	14	$	—	Other (income) expense, net

Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Revenue (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue
Less: Refining charges	$ (89)	$ (114)	$ (137)	$ (206)
Sales, net	19,219	23,993	40,759	39,354
Gold sales
Revenue
Sales, net	$ 19,308	$ 24,107	$ 40,896	$ 39,560

Gold and Silver Rounds/Bullion (Details) $ in Thousands	Jun. 30, 2023 USD ($) $ / oz oz
Gold and Silver Rounds/Bullion
Gold and silver rounds/bullion	$ 225
Silver
Gold and Silver Rounds/Bullion
Investment owned balance in ounces \| oz	10,000
Investment owned balance in per ounces \| $ / oz	22.47
Gold and silver rounds/bullion	$ 225

Inventories (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Inventories
Stockpiles	$ 5,698,000	$ 5,832,000
Leach pad	44,502,000	40,786,000
Dore		32,000
Subtotal - product inventories	50,200,000	46,650,000
Materials and supplies	509,000	505,000
Total	50,709,000	47,155,000
Low-grade ore stockpile	$ 0	$ 1,500,000

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Income Taxes
Federal tax rate			21.00%
Minerals tax rate			5.00%
Mining and income tax expense	$ 908	$ 1,423	$ 2,456	$ 1,849
Uncertain tax positions	0		0
Valuation allowance	$ 0		$ 0		$ 0

Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Prepaid Expenses and Other Current Assets
Contractor advances	$ 81	$ 273
Prepaid insurance	557	309
Interest receivable	370	85
Other current assets	253	63
Total	$ 1,261	$ 730

Property, Plant and Mine Development, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Property, Plant and Mine Development, net
Subtotal	$ 91,751		$ 91,751		$ 87,561
Accumulated depreciation and amortization	(63,133)		(63,133)		(56,980)
Total	28,618		28,618		30,581
Capital expenditures included in accounts payable			800		600
Depreciation and amortization	2,900	$ 4,200	6,430	$ 7,011
Asset retirement costs
Property, Plant and Mine Development, net
Subtotal	5,171		5,171		5,171
Construction-in-progress
Property, Plant and Mine Development, net
Subtotal	13,064		13,064		9,522
Furniture and office equipment
Property, Plant and Mine Development, net
Subtotal	631		631		590
Leach pad and ponds
Property, Plant and Mine Development, net
Subtotal	3,732		3,732		3,732
Land
Property, Plant and Mine Development, net
Subtotal	38		38		25
Light vehicles and other mobile equipment
Property, Plant and Mine Development, net
Subtotal	558		558		544
Machinery and equipment
Property, Plant and Mine Development, net
Subtotal	16,271		16,271		15,698
Process Facilities And Infrastructure
Property, Plant and Mine Development, net
Subtotal	8,863		8,863		8,856
Mineral interests and mineral rights
Property, Plant and Mine Development, net
Subtotal	18,953		18,953		18,953
Mine development
Property, Plant and Mine Development, net
Subtotal	24,365		24,365		24,365
Software and licenses
Property, Plant and Mine Development, net
Subtotal	$ 105		$ 105		$ 105

Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Other Current Liabilities
Accrued royalty payments	$ 560	$ 547
Accrued property and excise taxes	367	721
Other accrued expenses	20	56
Total	$ 947	$ 1,324

Asset Retirement Obligation (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Asset Retirement Obligation
Asset retirement obligation - balance at beginning of period	$ 5,863	$ 4,725
Changes in estimate		789
Payments	(18)	(47)
Accretion	257	396
Asset retirement obligation - balance at end of period	6,102	5,863
Off-balance sheet arrangement	$ 12,500	$ 12,500
Risk-free rate	11.00%

Commitments and Contingencies (Details) $ in Millions	Jun. 30, 2023 USD ($)
Commitments and Contingencies
Contractual payments remaining as on date	$ 2.1

Leases - Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Nov. 30, 2022
Leases
Operating lease weighted average lease term	6 months		6 months
Discount rate	7.48%		7.48%
Residual value guarantee			false
Renewal Term						12 months
Right-of-use asset	$ 2,078		$ 2,078		$ 3,826	$ 3,800
Operating lease liability	2,078		2,078		3,800	3,800
Maturities of operating lease liabilities
2023	2,126		2,126
Total lease payments	2,126		2,126
Less imputed interest	(48)		(48)
Present value of minimum payments	2,078		2,078		3,800	$ 3,800
Less: current portion	(2,078)		(2,078)		$ (3,826)
Inventory
Leases
Lease costs capitalized	$ 900	$ 900	$ 1,900	$ 2,700

Leases (Details) - USD ($) $ in Thousands	6 Months Ended
Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022
Leases
Operating cash flows from operating leases	$ 1,858	$ 2,660

Other (Income) Expense, Net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Other (Income) Expense, Net
Interest (income) expense	$ (469)	$ 27	$ (831)	$ 44
Charitable contributions	36	41	73	42
Unrealized loss from gold and silver rounds/bullion, net	14		14
Other income	(15)	(3)	(17)	(4)
Total	$ (434)	$ 65	$ (761)	$ 82

Net Income per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net Income per Common Share
Net income	$ 3,604	$ 6,565	$ 9,972	$ 9,183
Basic weighted average shares of common stock outstanding	24,084,542	24,024,542	24,074,312	24,010,061
Diluted effect of share-based awards	141,411	182,643	144,958	194,599
Diluted weighted average common shares outstanding	24,225,953	24,207,185	24,219,270	24,204,660
Net income per share:
Net income per common share, Basic	$ 0.15	$ 0.27	$ 0.41	$ 0.38
Net income per common share, Diluted	$ 0.15	$ 0.27	$ 0.41	$ 0.38
Anti-dilutive instruments outstanding			66,000	60,000

Fair Value Measurement (Details) - Level 1 - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value Measurement
Cash and cash equivalents	$ 46,913	$ 45,054
Gold and silver rounds/bullion	$ 225

Fair Value Measurement - Changes in the fair value (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023
Fair Value Measurement
Unrealized gold and silver rounds/bullion loss, net	$ 14	$ 14

Stock-Based Compensation - Assumptions (Details) - Employee stock options	6 Months Ended
	Jun. 30, 2022 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Stock price	$ 7.06
Expected Term	3 years 6 months
Risk free rate	2.06%
Expected volatility	75.87%
Dividend rate	7.25%

Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Stock-Based Compensation
Stock-based compensation			$ 103	$ 97
Incentive Plan \| Employee stock options
Stock-Based Compensation
Options granted		0	0	30,000
Vesting period				3 years
Stock options exercised (in shares)	0	0	60,000	63,334
Options, exercised, weighted average exercise price			$ 1.00	$ 1.00
Incentive Plan \| Restricted Stock Units
Stock-Based Compensation
Granted RSU	36,000	0	36,000	0
Vesting share price	$ 7		$ 7
Vesting period	3 years		3 years
Incentive Plan \| Maximum
Stock-Based Compensation
Shares available for issuance	5,000,000		5,000,000
General and administrative expenses
Stock-Based Compensation
Stock-based compensation	$ 50	$ 50	$ 100	$ 100

Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Shareholders' Equity
Dividends	$ 3,854	$ 2,883	$ 6,741	$ 5,763
Dividend per share	$ 0.16	$ 0.12	$ 0.28	$ 0.24

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FTCO Fortitude Gold Corporation (QB)