Superior Gold Inc. (TSX-V: SGI) (OTCMKTS: SUPGF) announces financial results for the fourth quarter and full-year 2022 for the Company’s 100%-owned Plutonic Gold operations, located in Western Australia.

Fourth Quarter Highlights

• Production of 14,448 ounces of gold, a 31% decrease over the comparative quarter of 2021 as a result of lower grades in both the underground and surface material milled,
• Sold 14,794 ounces of gold at total cash costs¹ of $1,964 per ounce sold, an increase of $674 per ounce sold or 52% in comparison to the fourth quarter of 2021 due to fewer ounces produced,
• All-in sustaining costs¹ increased by $675 per ounce sold or 48%, in comparison to the fourth quarter of 2021, to $2,091 per ounce sold, above the realized gold price¹ of $1,704 per ounce, due to higher total cash costs¹, partially offset by lower sustaining exploration and capital expenditures¹,
• Milled 360kt of ore, a 7% decrease over Q4 2021 following the temporary suspension of mining at Main Pit Deeps,
• Cash equivalents of $8.1 million, and
• Secured an AUD$10 million debt financing with Auramet International on October 7, 2022.

Full-Year Highlights

• Production of 62,336 ounces of gold, an 19% decrease over the prior year as a result of lower grades in both the underground and surface material milled,
• Sold 62,218 ounces of gold at total cash costs¹ of $1,761 per ounce sold, an increase of $406 per ounce sold or 30% in comparison to the year ended December 31, 2021 due to fewer ounces produced,
• All-in sustaining costs¹ increased by $459 per ounce sold or 31%, in comparison to the year ended December 31, 2021, to $1,931 per ounce sold, above the realized gold price¹ of $1,807 per ounce, due to higher total cash costs¹ as well as higher sustaining exploration and capital expenditures¹,
• On February 23, 2023, the Company announced it entered into an arrangement agreement pursuant to which Catalyst Metals Limited would acquire all of the issued and outstanding common shares of the Company representing a premium of 62% to the closing price of Superior shares on the day prior to the announcement and this transaction is subject to certain approvals and other closing conditions, and
• On March 30, 2023, the Company announced it had entered into a CAD$5 million bridge loan with Auramet International.

Chris Jordaan, President, and CEO of Superior Gold stated: “The Company experienced several headwinds in 2022, largely a result of high absenteeism due to Covid-19 that affected our employee and contractor work teams across Q2 and into Q3 with Covid-19 infection rates as high as 15% of the workforce. This had a significant impact on development rates in the underground which had a lingering effect into Q3 as the Company worked to increase development back to previous levels.  Production from both the underground and open pit operations were impacted. Following continued underperformance of the open pit, activities were temporarily suspended in Q4. Additionally, a focused improvement strategy on the underground was developed in Q3 and implementation started in Q4. The Company has started to experience improved performance from the underground mine as a single source of ore.

The focus continues to be on the leading underground performance indicators of increasing development and production drilling and improving developed inventories in both drilled and broken stock. These will remain the focus for 2023 and will enable greater stope availability and access to higher grade stopes for increased milled grade. The suspension in open pit mining resulted in a 47% increase in grade achieved in Q1 2023 when compared to Q4 2022.

The mineral resource and reserve statement was updated for 2021 and announced in 2022 (see press release dated May 25, 2022). Proven and Probable Mineral Reserves increased by 66% to 630 thousand ounces of contained gold. Measured and Indicated Mineral Resources, inclusive of Mineral Reserves, increased by 2% to 1.92 million ounces of contained gold while Inferred resources increased 29% to 3.97 million ounces of contained gold.

During 2022, Superior Gold secured a Gold Loan for A$10m with Auramet under similar conditions as the previous loan to provide added liquidity for the Company.”

Summary of Financial and Operational Results:

Plutonic Gold Operations

Quarterly performance summary

The Plutonic Gold Operations produced and sold 14,448 and 14,794 ounces of gold, respectively, for the fourth quarter of 2022. Total cash costs of $1,964/ounce sold and all-in sustaining costs of $2,091/ounce sold for the three-month period ended December 31, 2022 were above the realized gold price of $1,704/ounce.

In comparison, 20,983 and 21,143 ounces of gold were produced and sold, respectively for the fourth quarter of 2021. Total cash costs of $1,290/ounce sold and all-in sustaining costs of $1,416/ounce sold were below the realized gold price of $1,786/ounce for the three-month period ended December 31, 2021.

Total cash costs and all-in sustaining cash costs increased by 52% or $674 per ounce sold and 48% or $675 per ounce sold, respectively, over the prior period. This was primarily a result of lower tonnes milled from both the underground and open pit operations largely as a result of the lingering effect of labour shortages in Western Australia which also impacted the ability to access higher grade ore in the underground. The ongoing underperformance in the Main Pit Deeps Project resulting in a temporary suspension of activity with the open pit.

The reductions in tonnes and grade milled were partially mitigated by an increase in the processing of development legacy stockpile material. All-in sustaining cash costs were also higher as a result of lower production, partially offset by a decrease in sustaining exploration and capital expenditures in comparison to the fourth quarter of 2021.

Year to date performance Summary

The Plutonic Gold Operations produced and sold 62,336 and 62,218 ounces of gold, respectively, for the twelve months ended December 31, 2022. Total cash costs of $1,761/ounce sold were below the realized gold price of $1,807/ounce for the twelve-month period ending December 31, 2022, while all-in sustaining costs of $1,931/ounce were approximately 7% higher than the realized gold price due to higher cost of sales and sustaining capital expenditures.

In comparison, 77,321 and 77,061 ounces of gold were produced and sold, respectively, for the twelve months ended December 31, 2021. Total cash costs of $1,355/ounce sold and all-in sustaining costs of $1,472/ounce were below the realized gold price of $1,784/ounce for the twelve-month period ending December 31, 2021.

Total cash costs and all-in sustaining cash costs increased over the prior period primarily due to lower grade and tonnes from the underground operation and underperformance of the open pit.

Initial development of the Main Pit Deeps project was hampered by heavy rainfall earlier in the year and the subsequent inability to achieve planned mining rates and therefore acceptable unit mining costs resulted in the Company temporarily suspending open pit mining operations. The Company will assess alternatives to recommence mining at Main Pit Deeps in conjunction with the Main Pit pushback project.

The Company generated net cash from operations after working capital changes of $10,968 for the twelve months ended December 31, 2022, which included the proceeds of the gold loan.

Exploration Activities

The Company reduced its exploration programs in the quarter to focus all diamond drills on generating and aligning short and medium term plans and schedules to access higher grade ore for production.

Outlook

Following the Company’s decision to temporarily suspend operations in the Main Pit Deeps project, our focus is primarily targeted at reducing costs and improving margins in the underground operation.

Once operational performance in the underground stabilizes and consistently performs, our focus will extend to exploration to identify new discoveries and revisiting the Main Pit pushback initiative.

Qualified Person

The scientific and technical information in this news release has been reviewed and approved by Ettienne Du Plessis, who is a “qualified person” as defined by NI 43-101. Mr. Du Plessis is not independent of the Company within the meaning of NI 43-101.

About Superior Gold

Superior Gold is a Canadian-based gold producer that owns 100% of the Plutonic Gold Operations located in Western Australia. The Plutonic Gold Operations include the Plutonic underground gold mine and central mill, numerous open-pit projects including the Plutonic Main Pit push-back project, the Hermes open pit projects, and an interest in the Bryah Basin joint venture. Superior Gold is focused on expanding production at the Plutonic Gold Operations and building an intermediate gold producer with superior returns for shareholders.