UNDERGROUND STOPE GRADE INCREASED BY 23% RELATIVE TO PRIOR QUARTER
STRONG CASH POSITION SUBSEQUENT TO EQUITY FINANCING IN OCTOBER
(In U.S. Dollars unless otherwise stated)
Superior Gold Inc. (TSX-V: SGI) announced its financial and operating results for the third quarter ended September 30, 2020.
Third Quarter Highlights:
Highlights Subsequent to Quarter End:
“The third quarter included several positive changes for Superior Gold that will help reposition the Company as a profitable emerging mid-tier gold producer operating in a tier one mining jurisdiction. We recently strengthened our balance sheet, improving our cash position and securing the liquidity to advance drilling and development in order to open new mining fronts at the Plutonic underground gold mine. In addition, we are advancing an important open pit opportunity that could provide a steady supply of ore to supplement the underground feed, providing long-term stability and expanding our production rates,” stated Tamara Brown, Interim CEO.
“Our operating results during the quarter were in-line with expectations. We were pleased to report underground stope grades mined increased by 23% over the second quarter, something we will continue to focus on as we reposition this asset for long-term success. We are also focused on improving productivities which we expect will benefit from the recent arrival of new mobile mining equipment, aimed at improving equipment availability and materially lowering maintenance costs moving forward. During the third quarter, operating costs in Australian Dollars declined to the lowest level in 2020, but were negatively impacted by the strengthening of the Australian to U.S. Dollar exchange rate which adversely impacted our AISC by approximately $130 per ounce relative to the second quarter.
Looking forward, we are happy to confirm that open pit material will be incorporated into our 2021 production profile, work we have advanced in parallel with the PEA of a push-back of the Plutonic main pit. Our strategic review process remains ongoing as we assess all opportunities to maximize value for shareholders, including assessing all potential additional sources of ore feed. Finally, we will also be launching new surface and underground exploration programs as we follow up on our recent drilling success and seek to organically expand our reserve and resource base.”
This release should be read in conjunction with the Company’s Management Discussion and Analysis and consolidated financial statements for the year ended September 30, 2020. These documents will be posted on the Company’s website at www.superior-gold.com and SEDAR at www.sedar.com.
Summary of Financial and Operational Results:
September 30, 2020
September 30, 2020
|All amounts in $ millions except where noted|
|Cost of sales||25.6||73.5|
|General and administrative||1.2||2.9|
|Operating income (loss)||(0.4)||0.3|
|Income (loss) before taxes||(2.0)||(6.2)|
|Net income (loss)||(2.1)||(6.3)|
|Earnings (loss) per share – basic and diluted||(0.02)||(0.06)|
|Adjusted net income (loss)1||(1.3)||(2.0)|
|Adjusted net income (loss) per share – basic1||(0.01)||(0.02)|
|Cash flow from operations||0.4||0.1|
|Cash and cash equivalents||14.1||14.1|
|Weighted average number of common shares outstanding (basic)||97,134,473||97,111,728|
|Stope material mined (Tonnes)||157,430||461,466|
|Stope grade mined (g Au/t)||2.96||2.84|
|Development material mined (Tonnes)||58,114||186,141|
|Development grade mined (g Au/t)||2.10||1.98|
|Surface material milled (Tonnes)3||178,627||513,726|
|Surface material grade (g Au/t)3||0.20||0.30|
|Total material milled (Tonnes)||379,969||1,139,830|
|Grade milled (g Au/t)||1.57||1.56|
|Gold recovery (%)||82||82|
|Gold Produced (ounces)||15,699||47,227|
|Gold Sold (ounces)||15,492||47,878|
|Total cash costs ($/ounce)1||1,471||1,393|
|Average realized price1 ($/ounce)||1,756||1,643|
Plutonic Gold Operations
The Plutonic Gold operations produced and sold 15,699 and 15,492 ounces of gold, respectively, for the third quarter of 2020. Total cash costs1 of $1,471/ounce sold and AISC1 of $1,617/ounce were below the realized gold price1 of $1,756/ounce for the three-month period ending September 30, 2020. In comparison, 16,627 and 17,900 ounces of gold were produced and sold, respectively for the third quarter of 2019. Total cash costs1 of $1,504/ounce sold and AISC1 of $1,652/ounce were above the realized gold price1 of $1,483/ounce for the three-month period ending September 30, 2019.
Total cash costs and AISC decreased over the prior period primarily as a result of higher underground tonnes and grade milled, partially offset by the processing of low-grade legacy stockpiles in the current period versus the processing of higher-grade Hermes stockpiles in the prior period. The variance from prior period for underground grade was the result of scheduling and developing higher grade stopes and focusing on operational improvements to reduce mining dilution.
The Company generated net cash from operations after working capital changes of $0.4 million for the three months ending September 30, 2020 after the repayment of $2.0 million to Auramet under the gold loan.
Plutonic Main Pit Push-back
The Company is currently evaluating opportunities to leverage its excess mill capacity with the processing of open pit sources of ore located close to its processing facilities at the Plutonic Gold operations. Development, optimization, and permitting is well underway at the Plutonic East, Perch, and Salmon open pits as well as the Hermes and Hermes South open pit projects located 65 kilometres and 85 kilometres to the southwest of the mill, respectively.
In addition, the Company is in the process of completing a PEA for the Plutonic Main Pit project to determine the economics associated with a push-back on the past producing open pit which ceased production in 2005. The results of the study could potentially provide the Company with an important new source of open pit feed to supplement the underground production for the processing facilities which consist of a 1.8 million tonnes per annum main mill and 1.2 million tonnes per annum secondary mill which is currently on care and maintenance.
During the three and nine months ended September 30, 2020, the Company operated two underground diamond drilling rigs with 15,471 and 52,774 metres, respectively, of drilling completed. Of the total, 12,910 and 34,095 metres, respectively, were drilled for grade control and stope design while 2,570 and 18,680 metres, respectively, were for reserve and resource expansion.
During the third quarter, the focus for reserve and resource expansion was interpretive geological modelling of new mining fronts. A third drill is being added in the fourth quarter to increase the reserve and resource expansion drilling and to target the opening of new mining fronts.
The Company maintains its 2020 production guidance of 60,000 to 70,000 ounces of gold, but due to a 9% strengthening in the Australian to U.S. Dollar exchange rate in the third quarter of 2020, the Company has revised its 2020 cash cost guidance as follows:
(July 30, 2020)
(November 18, 2020)
|Production (oz of Gold)||60,000 – 70,000||60,000 – 70,000|
|Cash Costs ($/oz)1||$1,250 – $1,350||$1,375 – $1,425|
|AISC ($/oz)1||$1,350 – $1,450||$1,500 – $1,550|
|Note: November 18, 2020 guidance is based on an Australian to U.S. Dollar exchange rate of 0.70.|
Scientific and technical information in this news release has been reviewed and approved by Keith Boyle, P.Eng., Chief Operating Officer of the Company, who is a “qualified person” as defined by National Instrument 43-101 (NI 43-101). Mr. Boyle 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, 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.
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