Fortitude Gold Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 5, 2026

Key Takeaways

  • Positive Sentiment: Second-quarter gold production rose 210% sequentially to 2,133 ounces, with $8.2 million in net sales, $5.4 million in mine gross profit, and $0.6 million in net income.
  • Positive Sentiment: Fortitude Gold completed a $5.5 million private placement and ended the quarter with $13.5 million in cash and $35.4 million in working capital; management said future development is intended to be funded primarily through internally generated cash flow.
  • Positive Sentiment: Isabella Pearl is now connected to the power grid after a lengthy permitting and construction process, with preliminary savings estimated at approximately $75,000 per month; the heap-leach pad expansion has also begun.
  • Positive Sentiment: Exploration continues to produce high-grade intercepts at Scarlett North, County Line, and the East Camp joint venture, while the company pursues larger exploration permits that could allow substantially more drilling.
  • Negative Sentiment: Management is not providing production guidance because of variable recovery rates and activity across three mining areas. Access to approximately 40,000 higher-grade ounces at County Line is targeted for late 2027, subject to the pit-wall layback and equipment availability.
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Earnings Conference Call
Fortitude Gold Q2 2026
00:00 / 00:00

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Operator

Good day, everyone. Welcome to the Fortitude Gold 2026 second quarter conference call. At this time, all participants are placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star one on your phone to enter the question queue at any time. We will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Jason Reid, Chief Executive Officer of Fortitude Gold. Sir, the floor is yours.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Thank you. Good morning, everyone. Thank you for joining Fortitude Gold Corp's 2026 second quarter conference call. Following my comments and associated presentation for those who joined online, we will have a question-and-answer period. Joining me on the call today for the Q&A portion will be Ms. Janet Turner, our Chief Financial Officer. Let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Forward-looking statements in the earnings release that we issued yesterday, along with the comments on this call, are made only as of today, August 5th, 2026. We undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find a reconciliation of non-GAAP financial measures referred to in our remarks in our Form 10-K filed with the SEC for the year ended December 31st, 2025. The second quarter of 2026 highlights include 2,133 gold ounces produced, an increase of 210% from the first quarter of 2026. Net income of $0.6 million, or $0.02 per share. We completed a $5.5 million private placement. We are now connected to the power grid. $8.2 million net sales. $13.5 million cash balance at June 30th, 2026. $35.4 million working capital at June 30th, 2026. $5.4 million mine gross profit. $4.7 million exploration expenditures.

Jason Reid
Jason Reid
CEO at Fortitude Gold

$1,200 total cash cost after by-product credits per gold ounce sold for Isabella Pearl. $2,549 per ounce total all-in sustaining cost for the Isabella Pearl mine. $1,326 total cash cost after by-product credits per gold ounce sold for the County Line mine. $1,886 per ounce total all-in sustaining cost for the County Line mine. $0.8 million in dividends paid. 611 gold ounce rounds or bullion. We continue to focus on increased throughput tons from areas being mined to achieve higher gold production in future quarters. We are actively mining from the Isabella Pearl deep, Scarlet South, and County Line East pit areas. The latter two areas currently have a lower average gold grade that requires increasing throughput to achieve more production. We are pushing back the County Line pit wall to access higher-grade gold deep.

Jason Reid
Jason Reid
CEO at Fortitude Gold

That pit wall layback timeframe is likely to take into the second half of 2027, depending on how much more we can mine in Isabella Pearl and Scarlet South. Accessing the approximate 40,000 ounces of high-grade gold after the pit layback is complete is targeted for late 2027 and is estimated to provide approximately two years of gold production. Grid power is finally energizing our Isabella Pearl project. What a monumental project that turned out to be. Between the awful Biden permit backlogs and the bureaucracy delays of large utility construction, what should have been a three to six-month process took over five years. Thankfully, with the Trump administration, we got our permits, and now we are finally connected to the grid for energy cost savings.

Jason Reid
Jason Reid
CEO at Fortitude Gold

It's too early to hard circle the cost savings of being connected to the grid for only a short period of time, but so far, it looks like approximately $75,000 a month was saved since connection. This savings amount is likely to fluctuate and potentially increase depending on numerous variables and the volatility in oil prices. We are currently, and we expect to continue to save substantially on our energy costs. Other ongoing projects include Golden Mile and Scarlet North permitting, both of which are marching forward. After a contractor start delay, the Isabella Pearl heap leach pad expansion has begun. On the exploration front, we announced nice results from the Scarlet North with 6.51 m grading 2.28 grams per ton gold within 24.38 m, grading 1.25 grams per ton gold.

Jason Reid
Jason Reid
CEO at Fortitude Gold

At County Line, with 4.57 m grading 2.23 grams per ton gold within 22.86 m, grading 0.77 grams per ton gold near surface at about 100 m west of the Scarlet pit. The exciting joint venture on East Camp with Hawthorne Land & Minerals is going very well. Several great press releases during the quarter included intercepts of 3.05 m grading 12.90 grams per ton gold within 24.38 m, grading 3.89 grams per ton gold. 4.57 m grading 10.24 grams per ton gold within 28.96 m grading 2.14 grams per ton gold. In this month, we announced 9.14 m grading 2.84 grams per ton gold within 21.34 m grading 1.43 grams per ton gold at East Camp Douglas. Mineralization continues to start both shallow and depth and possibly comprised of vein swarms that could potentially be mined via open pit. Critical mass is building.

Jason Reid
Jason Reid
CEO at Fortitude Gold

As we continue to focus on obtaining all possible permits under the Trump administration, in case the country moves back into an anti-business, anti-mining administration like we had during Biden. With that, I would like to thank everyone for their time today on this conference call. Operator, if you could please open up the lines for potential Q&A. Thank you.

Operator

Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speaker phone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Before we take any live questions or from the Q&A platform, we did have some email questions come in I'd like to get to first. The first one is from Dr. Joshi, who has several questions. One, production ramp up and heap leach recovery. With ore now being mined from Isabella Pearl, Scarlet South and County Line, should shareholders expect recovered gold production to continue increasing over the next several quarters as the heap leach inventory matures? That's the goal. We're not giving any guidance as to how much as we have so many things going on right now. Whatever we would estimate would be wrong. We have seen some increases in production, which is good, and we hope that trend continues.

Jason Reid
Jason Reid
CEO at Fortitude Gold

He goes on to say, could Jason please explain the normal timing lag between ore being mined and stacked on the heap leach pad that results in gold production and sales? We have a pad that's quite a few years old, and we continue to get residual gold off of that. It's real hard to forecast what that residual will be just because it takes so long for the residual gold to come out. Having said that, with the new ore that goes on, the gold comes out pretty rapidly. It also depends on what deposit it's coming from, and we're mining from three different areas. There's a lot of variable in there. Yeah, that's how it works. We add new ore to the old pad, and we get a shot in the arm from the new ore, and then the residual leach continues.

Jason Reid
Jason Reid
CEO at Fortitude Gold

The second question is the County Line main permit. The company has previously indicated that approximately 40,000 ounces of higher-grade mineralization should become accessible once the County Line main pit waste layback is completed. Is management still comfortable with that estimate and the anticipated 2027 timing? Should shareholders then expect a meaningful improvement in grade, production, and operating margins? A great question. Yeah, we're comfortable. There's more or less 40,000 ounces in the County Line main pit. As you heard me state in the past and in this call, and I'll say right now, we're doing a pit layback. We just did a ramp retreat from the old ramp, and now we're going to be pushing back the wall. As far as timing, though, the longer we can pull the higher grade out of the Isabella Pearl, we're going to do that.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Until we finish there and/or Scarlet, we're not going to have a lot of bandwidth to really do a heavy pit layback. A lot of this is in flux as a function of how long we're mining from the other two areas before we can deploy a lot more of that equipment for the layback. A little vague on the timing there, but that's the goal is probably 2027, to be pulling those ounces out. I don't want to be held to these numbers I give you right now, but let's just take that 40 and split it in half and do 20,000 a year. That would be a nice goal to add to the additional production from elsewhere. Yeah, we're really looking forward to that, with the higher grade. Third, Scarlet North.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Recent drill results continue to extend Scarlet North mineralization immediately north of Isabella Pearl processing facility. At what stage would management consider publishing an initial resource estimate, or is the current priority still to expand and better define the mineralized footprint? Good question. Right now we're just trying to expand and define. Yeah, at some point in the future, we'll possibly look to a resource, but more importantly, we just want to keep drilling. You're seeing some drill results being press released for good grade and push out north of Scarlet North, and there's more to come. We're actively working on another press release for that. That's great and good news that we continue to hit mineralization there. Number four, Golden Mile. The FAST-41 permitting schedule currently indicates an expected completion around April 2027, assuming permitting continues to progress as planned.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Does management still expect Golden Mile development to commence in 2027? The answer to that is yes. As soon as we get that permit, we want to be hitting the ground running to build. Just to remind everyone that we did purchase, and have built the entire process facility modularly, and we've taken delivery of it, and it's our laydown yard in Isabella Pearl. Yes, as soon as we can get permission to move that out there and set it up, we're going to get going on it. Yes, we like being included in that FAST-41, and we hope that that good progress continues. With that, operator, before I get to some of these into a little Q&A, if there's any live questions, let's take them. Otherwise, I'll move on to these.

Operator

Certainly. Your next question's coming from John Bair from Ascend Wealth. Your line is live.

John Bair
Analyst at Ascend Wealth

Thanks, Jason.

Jason Reid
Jason Reid
CEO at Fortitude Gold

John, how are you?

John Bair
Analyst at Ascend Wealth

I'm fine. Not sure exactly what was happening, during those recent comments, you were kind of breaking up a little bit. You were real clear on your opening statements, I don't know if it's my end or not, anyways. You've pretty well addressed one of my first questions, and that was when you expected the layback completion for the County Line pit. Part of my, and I think you also addressed this as well, part of my question was, would there possibly be some overlap of mining ore at County Line as Pearl Deep and Scarlet South kind of wind down? If I understood it correctly, those two will get completed before you'll start mining ore from the County Line pit. Am I right on that?

Jason Reid
Jason Reid
CEO at Fortitude Gold

Okay. No, it's a great question. Let me try to clarify. We're mining from three different areas. We are mining from County Line, but we're the County Line East pit. The higher grade is in the County Line pit, we're actively mining from the east pit, the grade is closer to a 0.5. It's not necessarily our ideal targeted grade, which is closer to a gram, which is the County Line pit. No, we have equipment at each location. That pit layback is going to require substantial time and effort with equipment. We've started it already, but to really push that, we do want to finish up either Isabella Pearl Deep and Scarlet South. They likely won't both conclude at the same time.

Jason Reid
Jason Reid
CEO at Fortitude Gold

It just kind of depends on My gut tells me we'll be done at Isabella Pearl first, and then we'll redeploy that equipment over to County Line. If that plays out that way, then we'll be able to deploy more equipment over there. Coming back to your question, will there be overlap? Yes, there will be. There likely will be mining probably from Scarlet South while we continue to pull from County Line East pit and do the pushback. Yes, we just have a lot going on.

Jason Reid
Jason Reid
CEO at Fortitude Gold

As you're fully aware, we never planned to schedule all these as such. It would've been nice to have one at a time, but with those permit delays that derailed us for four years, then Trump gets in, we get our permits right out of the gate. Now we're drinking from a fire hose. We're just trying to balance, and we only have so much equipment and so many manpower, individuals to drive those, and so we just deploy them on a priority basis. There will be overlap. I expect there to be overlap.

John Bair
Analyst at Ascend Wealth

Good. Well, good problems to have, I guess, given the past few years. Expanding a little bit on the permitting thing, given your comments, given what you've just gone through, is there any way you can expand your overall permitting process to encompass future areas of interest that maybe you haven't started doing any exploration on, any drilling on, or in areas like at East Camp and elsewhere, to try to get those permits in hand proactively in the event that, as you have alluded to, if the administration changes and the attitude changes, put you back into where you were the past four years?

Jason Reid
Jason Reid
CEO at Fortitude Gold

Yeah. It's a great question, John. On the permitting side, if we just look for what we're really focused on right now is trying to get additional mine permits so that if what you just described, as we go back to an anti-mining, anti-business administration like we had under Biden where they just ground everything to a halt, we want to have additional mine permits in our back pocket so that we can weather any additional four-year storm, so to speak. That's why we're actively in the process of permitting Scarlet North and Golden Mile. The Golden Mile's in the FAST-41. We continue to drill Scarlet North, but we're also in that permitting process. The goal would be to have both of those permits, mine permits, ability to mine in our back pocket before the administration changes, if it does.

Jason Reid
Jason Reid
CEO at Fortitude Gold

As far as your other question on can we get ahead of this, we are actively going after exploration EA permits. To back up a minute, right now, we have to operate under a notice of intent called the NOI for short, and that gives us the ability to explore 5 acres. Once you're done with that 5-acre exploration and you want to do more, you have to rehab that area, prove to the regulators you've rehabbed it, and then apply for another NOI. I kind of call it a 5-acre dance. We've been doing that for years, but it takes time, and it's very arduous. We are going through this process, which when you do this, it takes about a year, but we've been going through the EA exploration process at both East Camp Douglas and Isabella Pearl.

Jason Reid
Jason Reid
CEO at Fortitude Gold

The East Camp Douglas EA is more advanced in that's in the NEPA process right now, if they stick to their timeframes, big if, but if they stick to their timeframes, you're looking at six months. We've been under that for about a month plus, we hope in the next handful of months, we'll get an EA exploration permit, which opens up as much as 120-125 acres. That is huge. That would allow us to send a lot more drills, and that's the plan, send a lot more drills up to various locations with the goal to try to add as many ounces as possible as quickly as possible. One of the reasons we did the JV with Hawthorne, is that now we have the funding to put as many drills as we want up there.

Jason Reid
Jason Reid
CEO at Fortitude Gold

It'd be great to have five drills up there after we get the EA permit, that just expedites. Instead of this 5-acre dance where you get 5 acres, you explore, then you have to rehab it. That all takes time. Then go for another five. We would open up over 100 acres of potential drilling, and we expect to add a tremendous number of ounces. We are doing the same thing on the trend at Isabella Pearl. If we as a company, all we had was Isabella Pearl, I'd still be very excited, let alone we have all the other properties. Isabella Pearl, we've locked up this major mineralized trend, across the highways, the historic Santa Fe pit that did over 300,000 ounces, Isabella Pearl's doing over 200,000.

Jason Reid
Jason Reid
CEO at Fortitude Gold

As we move on our trend that we have 100% of, I am confident there will be another Isabella Pearl or there will be another Santa Fe on this trend. There'll probably be several. The trick is for us to be in the game long enough to be the one that finds it. We're actively going after this exploration EA that again, once we get this one at Isabella Pearl, would open up another 100+ acres, and that puts us in the ability to drill so many more areas, explore more efficiently, get a lot more data, so to speak, and hopefully add a tremendous number of ounces in a short amount of time. We're trying to get ahead of that. Now, is that all going to come to pass before the administration changes? No.

Jason Reid
Jason Reid
CEO at Fortitude Gold

If we can get these two exploration EAs at both East Camp and Isabella Pearl, it just puts us in a better position for exploration drilling, in case another administration comes in that just as slow to issue NOIs. Yeah.

John Bair
Analyst at Ascend Wealth

You're really, yeah. I was going to say, you're really focusing on the active areas as opposed to, say, Ripper or somewhere else where you could get your permits in advance. I frankly don't know how long those permits are good for if you don't have any actual activity on them. I'm trying to think even further down the road, I guess.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Yeah. Well, we only have so much bandwidth, and keep in mind that we were in this area, well before the bull market and metals came back. We're watching major mining companies pick up things we turned down that we don't think is very prospective. We think we have the best properties. The flip side of that is we only have so much bandwidth to explore those properties.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Expect when we were put on a backflow with the Biden administration who almost completely derailed us as a company. The fact that now we can get our feet back under us, we're looking to add as many deposits and as many mine permits as we can. We're trying to, with the bandwidth we have, push as much as we can on all these fronts, permitting, both for mines, both for exploration. Coming back to your comment on Ripper, yeah, we're really not doing anything at Ripper right now.

Jason Reid
Jason Reid
CEO at Fortitude Gold

It's not a core asset, so to speak. We need to stay focused on what we can push as quickly as possible toward production to be safer in case we go back to an anti-mining administration, that we have numerous mine permits in our back pocket to go build mines, and again, weather a Biden equivalent. Hopefully that answers that question.

John Bair
Analyst at Ascend Wealth

Yeah. I've got more, but I'll follow up later. I'll let you move on to other questions. Thanks. Take care.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Thanks, John. Thanks for the questions.

John Bair
Analyst at Ascend Wealth

Sure enough.

Operator

Thank you. There are no further questions in the queue at this time.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Okay, perfect. There's a bunch of questions in. I'm not sure I can get up to all of these. Let's start on them. Okay. Ray Lieb. "When will you be providing production guidance?" This is a multifaceted question. I'll stop at each one and give my response. We're a ways out before doing guidance. As you heard on the call, it's like drinking from a fire hose. There's so many variables. We're mining from three different locations. Each specific deposit has a different recovery curve. We're putting that material on a pad, commingling it so that it's going through old residual leach. It's really hard to give guidance. I think at this point in time, any guidance we give would be wrong. As we move forward, we're trying to get back to a point where we give guidance.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Another part is, "Is production expected to increase in Q3?" I can't tell you whether it is or isn't going to, but that's the goal. It increased over the previous quarter. We were up 200%. That's the goal, right? It's all about trying to get more production. Go back to some semblance of what we used to be, which used to be about 40,000 ounces a year. We'd love at some point to get back there, but we're a ways from that. The most important thing, though, is we have our mine permit, some new mine permits. Second, then let's see. You expect to grow the treasury of bullion? Great question. I would love, Ray, to have a larger treasury in bullion. It's just right now, we're building several mines. We have, hopefully, Golden Mile the queue.

Jason Reid
Jason Reid
CEO at Fortitude Gold

We have need for capital to deploy there. We're probably not going to be adding to the bullion treasury. I'm glad we do have one. In an ideal world, it would be much larger, but yeah, given where we are today, I doubt we'll be adding to that. We're happy to have it, the one we do have. Another part of your question, is it somewhat confusing to have combined numbers on the statement of operations and then subtract out the non-controlling interest net income? I don't believe so. Janet could probably speak a little bit better on that than I can. No, I don't think it is. I think I got to most of your questions there, Ray. Thank you very much. The next one, Clyde Legamaricino. Sorry if I mispronounced your last name. How's the leach pad expansion going?

Jason Reid
Jason Reid
CEO at Fortitude Gold

How much larger will it be than the existing pad? Great question. We really, given the fact that we got these permits under the Trump administration and now are putting two mines into production, that existing pad is going to fill quickly. We really needed to move on the expansion. We signed the contract a while ago, and unfortunately, they were trying to finish up another project, and they were a little delayed. Just on the conference call earlier this week, they had moved equipment in, but they hadn't started, but they started. They've officially started, which is great. Yeah, that'll buy us more pad time and more ore to go on it.

Jason Reid
Jason Reid
CEO at Fortitude Gold

As far as how much larger, I don't have the exact percentage, but what's nice is when we go out toward the west, which we are, it also allows us to go higher on the pad. It's not just a spatial on the horizontal, but it's a vertical increase, too. That's good. Thanks for the question, Clyde. All right. Craig Hooper, can you provide some details on the pad with regards to specific mining areas? I assume the different ores are kept separate for metric tracking purposes. Is that a reason for the pad expansion? Great question. No, they're not kept separate. Where we get the information on the actual ores from various places are through the blast hole data. Very good data, and that's where we track what the grade is, the tonnage, et cetera, that is moving to the pad.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Once it gets to the pad and gets piled in the crushing area, then at that point, it gets commingled. When it gets put on the pad, think of these pads as like a very large checkerboard or chessboard, then many boards stacked on one another. Each square on all those boards, let's call them a cell, and we go in and we leach a cell, one cell at a time, or two cells or three cells at a time. The whole pad is not being leached. It's just a couple of those squares on a checkerboard, so to speak. Then we take it off drip, which actually helps the recovery, then we put it back on.

Jason Reid
Jason Reid
CEO at Fortitude Gold

When you think of how many cells are on the pad and all these different levels, and each level has its own number of cells, it gets really complicated. No, we know the grade and the ore going on, then it just gets commingled, then it's too hard to track. You can never track it otherwise. You just can't. That's just the way it is. Good question, Craig. Hopefully, I answered that. The next one, Scott McLeod. We had 611 ounces on hand at the end of Q. How many ounces do you see holding on to going forward? I think, yeah, you're referring to the bullion. I want to hang on to all those. Unless we need to sell them for CapEx projects or something. I don't envision gold really making another substantial pullback.

Jason Reid
Jason Reid
CEO at Fortitude Gold

I think it ran to $5,000 as a tell of where direction it's going to in the future, but it was on a hockey stick vertical curve. It needs to fill in. Nothing goes straight up. I love the fact that it's pulled back and held $4,000. I see today, or at least this morning, it was back up to $42. I think there's a solid chance gold continues to move up. Yeah, it just is nice to have physical. I think if all mining companies held a little bit of, or a lot, if they could, physical in their treasury, that'd be good in general for the gold price. I don't know that too many do. Anyway, good question, Scott. Thank you. The next one, Stephan Banker. Provide guidance for Q3 based on current line of sight. Yeah, we're not providing guidance yet.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Like you've heard me say over and over on this call, there's just too many variables. We'll be wrong whatever we say. The most important thing that you saw in this quarter is the production was up. Let us hopefully continue that trend. Gary Hayes, what is the strategy at East Camp? When will you be doing deeper drilling of the lithocap? Great question. We hit the two areas of the East Camp where we can drill. Because it's a district-sized land position, we are working off of two legacy NOIs. One is in the lithocap area, one is in the north veins area. We have tremendous amount of drill data that went into the labs, the first data that was coming back out is the East Camp, north vein areas, like White Rocks, where you've seen all the press releases.

Jason Reid
Jason Reid
CEO at Fortitude Gold

We do have a bunch of drill results in the queue for the lithocap, waiting to get those back. A few other areas as well. The strategy there is that now that we have, with this JV and the $40 million commitment, we have the capital to expedite this exploration. You've heard me say earlier that we're going after this EA, exploration EA, to open up instead of the 5-acre NOI dance, the 125-acre ability to drill. That, to me, will change everything. Right now, we're drilling from certain pads in certain areas, and we're hitting phenomenal grades, great width. The ability to just create another pad near there to do a step out and possibly expand that, could expedite the gold discovered up there.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Again, that EA is in the NEPA process, and hopefully in five months or less, we'll have that. The floodgates are going to open. We're going to drill like crazy up there because we'll have the ability to. The goal would be to try to define, obviously, as many deposits as we can. I think there'll be several up there. Also, at some point, to put a flag in the ground and make a decision and move and try to permit it as well. You hear this push from us. We're trying to explore, we're trying to permit as much as possible, having still the bad taste in our mouths for an anti-mining administration like the previous one. Another one from, [inaudible], there's a lot of them. Sorry if we don't get to all of you guys' questions here. [Brian Sugabart].

Jason Reid
Jason Reid
CEO at Fortitude Gold

Do you anticipate further dilution with new share issues, or is the primary plan to fund development with internal generated cash flow?" Yeah, the latter. It's primary to fund the internal generated cash flow. Everybody on this call knows we were beaten up and put on our back foot with the previous administration. That totally derailed our business plan. Now we're trying to put it back together, which with these permits in hand, we believe we can. We did have to dilute. Having said that, I put our capital structure up against any mining company in this space. We have still one of the tightest capital structures for a producer in this space. Those who may be listening who don't understand the space all that well, most explorers who are nowhere near production have hundreds of millions of shares outstanding.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Many large producers have half a billion, a billion, and we're a fraction of that. We have one of the tightest capital structures. Yeah, there's a time and a place, and we had to do that. Having said that, it'd be great if we can just move forward. Again, I don't have a crystal ball, so what'll happen'll happen. The goal would be to try to do it with cash flow. Great question. Gary Simmons says, "How many ounces oxide left to mine at Isabella Pearl?" We don't know, Gary. We had a resource on Isabella Pearl, and we mined down through that resource, and this was back in the Biden era. We weren't getting at our permits for instance, Scarlet or County Line, which we needed to then put those into production and have overlap with Isabella Pearl.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Those longer term shareholders that are on the call understand that we basically had a wall that we hit. We had to decide, do we continue to be a miner or do we send everybody home? We couldn't get the permits. Fortunately, gold at that time had gone to $3,000 an ounce, and we had run the pit shell at $1,800, let's say. The fact gold launched, it allowed us to go back and revisit, does it make sense to go after gold mineralization we know is lower than the pit shell, but we never put it in a resource? We had to call an audible. Because gold was at $3,000, it made this attractive to go deeper. Where we're mining from, Gary, we don't have a resource on. We're just mining it.

Jason Reid
Jason Reid
CEO at Fortitude Gold

As soon as it depletes completely, we'll redeploy that equipment elsewhere. I tell you, Isabella Pearl is the gift that just keeps on giving. It has been one just absolutely fabulous deposit. That's why we're also very focused on finding another one of these. I truly believe there's others that exist on this trend. We just want to be the ones that find it. It's a wonderful deposit. Coming back to your question, Gary, we don't have the number of ounces. We don't know. We just know there's mineral deep. We spent a year doing a pit layback at Isabella Pearl to access it. That was never part of the original business plan. It was to stay in business during the Biden administration. That's why we were doing it. Now we're down here mining it. When it depletes, it depletes.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Tom Sturrick, "What exploration expenses are budgeted for Q3, Q4 in 2026?" Great question. I'm not going to have the specifics you're going to like to hear. Obviously the budget we have, for instance, with the JV, that's a function of getting the EA, exploration EA. Then we can deploy. It'd be great to get four or five drills up there. That'll be a really sizable budget once we get that. As far as budgeting for our expansion of either County Line or Scarlet North, we're just watching our dollars knowing that we have to put other mines into production. While we are drilling them, they're pretty modest. They'll continue to be for the time being. I'm not going to give you a hard and fast number because too many things move, too many things are in flux right now. That's kind of where we're at.

Jason Reid
Jason Reid
CEO at Fortitude Gold

Fortunately, we are continuing to drill. You're seeing it in the drill results. As I mentioned earlier in the call, we've had some great drill results at East Camp Douglas. We had some great drill results, Scarlet North. We just got another tranche back. You guys are going to be seeing another press release on Scarlet North. This is wonderful because, again, whether we're currently drilling at Scarlet North on, for instance, a periphery of the next Isabella Pearl mine, we don't know. As long as we're still hitting structure, still hitting gold, that not only adds to that deposit, if you will, but it also may be leading us to the next one. I'm going to call it now. This has gone, I think, past time. If we didn't get to your questions, please reach out to Greg or myself.

Jason Reid
Jason Reid
CEO at Fortitude Gold

You're going to get us. We don't have secretaries. We can answer your questions directly. We want to thank everybody for your time today. Again, I am sorry if I didn't get to your questions. I think we're like eight minutes over. With that, we'll conclude. Thank you. We'll talk to you next quarter.

Operator

Thank you. Everyone, this concludes today's event. You may disconnect at this time. Have a wonderful day. Thank you for your participation.

Executives
    • Jason Reid
      Jason Reid
      CEO
Analysts
    • John Bair
      Analyst at Ascend Wealth
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