This Nevada gold firm has once again delivered on its key goals, ending 2020 on a high-note
Fiore Gold has well-and-truly captured the market’s attention this year, with expanding production and strong exploration success leading shares to nearly triple in value.
And now, the Nevada-focused gold produceris closing its exceptional 2020 on a high.
In an early Christmas present to investors, the firm has delivered a record set of annual financial results that validate its strategy and highlight many major incoming milestones.
Fiore may be at the beginning of a longer and larger re-rate that will reward early investors.
And with the company pushing aggressively towards its goal of becoming a 150,000 ounce-a-year producer right now, the next 12 months can be game-changing.
All in the delivery
Time and time again, Fiore has shown itself to be a company that delivers on its plans- something pivotal in a mining sector where performance is everything,
The firm has maintained these excellent standards in its latest figures.
As it stands, Fiore’s valuation is underpinned by the Pan Mine – a producing open pit, heap leach gold project in Nevada. And in the 12 months to 30 September 2020, it either met or beat many of its annual targets for Pan.
Full-year gold production came in at 46,031 ounces, not only within the guidance of 45,000-48,000 ounces but also an 11% increase over FY2019. Likewise, the firm mined 14,961 tonnes of ore per day at a stripping ratio of 1.5 and a grade of 0.015 ounces per tonne – all measures within or better than guidance.
Fiore was also able to continue its impeccable safety track record over the results period. It recorded zero lost-time injuries throughout 297,672 man-hours, netting the Small Mine Safety Award from the Nevada Mining Association for the fifth year running.
Performance was equally impressive on the fiscal side, as well.
Total cash costs of $947 per ounce sold and All-in Sustaining Costs of $1,148 per ounce sold both came in under Fiore’s forecasts. This helped the company to deliver record annual revenues of $77.9 million – up from $53.7 million in 2019 – and a 124% increase in mine operating income to $26.9 million.
FY2020 GUIDANCE VERSUS FY2020 ACTUAL RESULTS
Meanwhile, Fiore left the period with $23.2 million of cash in the bank, up $15.9 million year-on-year.
This is a remarkable sum for a miner of its size. But it becomes all the more impressive when you consider that this figure is what remained after heavy investments in portfolio-wide drilling and expansion over the period.
Thanks to Pan, Fiore has self-funded all of its drilling and study costs to date. It has not diluted shareholders through equity raises or taking on corporate debt once since it was formed in 2017.
That’s a very rare attribute in the production and exploration game.
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Possible re-rate triggers on the horizon
Two other key metrics in Fiore’s annual results were its operating cash flow and net income, which came in at $24.3 million and $18.0 million (or $0.18 in earnings per share) respectively.
As mentioned, the company’s shares have come a long way in 2020 to reach the C$1.42 at which they currently sit.
But when its C$139.6 million (US$109.42 million) market cap is viewed through the lens of these two figures and related multiples, Fiore continues to trade at an attractive valuation.
Especially given that its latest numbers reflect the performance of Pan alone. The reality is that Fiore has a great deal more going on under the hood.
In the months since the end of fiscal 2020, the company used the results of an extensive 21,000-meter expansion drilling programme to upgrade Pan’s resource and reserve estimates. This work almost entirely replenished every ounce of gold mined at the project over the last year and – critically – extended its life of mine out by two more years to 2025.
Further drilling to continue replacing mined ounces at Pan is already underway, targeting new areas such as the recently-identified Mustang target.
The firm also has two more potentially company-making projects in its portfolio.
First up is Gold Rock, which neighbours Pan and contains an estimated 403,000 ounces of indicated gold and 84,300 ounces of inferred gold at significantly higher grades.
A preliminary economic assessment delivered earlier this year gave Gold Rock a post-tax NPV of US$99.4 million and a post-tax IRR of 39.1%. This was based on 55,800 ounce-a-year production at a US$1,700 gold price.
And with federal permitting completed alongside various ongoing work programmes to enhance project economics, Fiore is now drilling and progressing a Feasibility Study through 2021, with the intent of producing in 2023.
Operating Gold Rock and Pan in unison like this would take the company past 100,000 ounces of gold production a year.
At this point, it would be the only multi-asset, 100% US domestic gold producer on the market.
Then there is Golden Eagle, the third project in Fiore’s portfolio that sits in Washington State.
With a recently-announced measured and indicated resource of 2 million ounces, this asset could be another great value driver for the company. Talks about spinning out the project alongside two larger neighbours are ongoing.
And finally, Fiore is on the hunt to find a producing or near-to-producing project that it can acquire. The goal is for this to add another ~50,000 ounces of annual production, taking the company ever-closer to that all-important 150,000 ounce-a-year production target.
FIORE GOLD’S ASSET BASE
Entering a game-changing period
Each project in Fiore’s broad US-based gold portfolio has the potential to add value to the company. And as the prospect of increased production ounces moves closer and closer, the business’s already-attractive share price and market capitalisation will potentially see a re-rate.
With its latest results, Fiore has once again demonstrated its excellent capabilities when it comes to delivering on plans. So, with a whole host of project milestones incoming, 2021 is poised to be the year this stock shines in the market.
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