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

Second Quarter Highlights

• Safety performance improved during the quarter with a 24% reduction in the total injury frequency rate achieved during the period. Our safety improvement program is progressing and on track
• Production of 15,196 ounces, a 21% decrease over the comparative quarter of 2021 as a result of unusually high rainfall and medical absenteeism as a result of the removal of COVID-19 restrictions in Western Australia in April 2022
• Sold 16,726 ounces of gold at total cash costs¹ of $1,748 per ounce sold, an increase of $336 per ounce sold or 24% in comparison to the second quarter of 2021 due to fewer ounces produced
• All-in sustaining costs¹ increased by $410 per ounce sold or 27%, in comparison to the second quarter of 2021, to $1,929 per ounce sold, above the realized gold price¹ of $1,877 per ounce, due to higher total cash costs¹ as well as higher sustaining exploration and capital expenditures¹
• Announced an updated Mineral Reserve and Resource statement indicating a 66% increase in mineral reserves
• Annual guidance adjusted with production now expected to range between 69,000 to 75,000 ounces, with all-in sustaining costs¹ to now range between $1,800/oz to $1,900/oz
• Strong cash and cash equivalents of $18.2 million

Chris Jordaan, President, and CEO of Superior Gold stated: “In the second quarter the Company, like many operators in Western Australia, was negatively impacted by some unexpected challenges including unusually high rainfall levels and an increase in COVID-19 cases, which when combined affected flights to the mine and caused an abnormal shortage of key employees in the underground mining operations and open pit contractors on-site. Both issues impacted planned production, particularly in accessing the Main Pit mill feed that was originally planned for Q2. Additionally, many of our service providers from Perth and other major centres also suffered from high absenteeism due to COVID-19, and service levels deteriorated accordingly which had a negative impact on operational support.

We are carefully monitoring and reviewing operations for further potential disruptions from COVID-19 or other causes which could adversely affect production and costs. Therefore, after a thorough operational review, management believed it is prudent to adjust production guidance to a range between 69,000 to 75,000 ounces for 2022 and increase all-in sustaining costs¹ to between $1,800 to $1,900 per ounce.

The mill is now running close to its nameplate capacity of 5,000 tonnes per day. The delivery of an additional jumbo, which has now arrived on site and is commissioned, and additional loaders and trucks for the underground mine are expected to have a positive impact on development metres and tonnes delivered from the underground in Q4 as we continue to target an exit rate of one million tonnes per year from the underground on an annualized basis.

The delay in the open pit operations has also impacted our planned ramp-up in production. The investments we are making this year are designed to deliver on the Company’s strategy to fully optimize the underground operation and when combined with the addition of new sources of open-pit feed, are expected to positively contribute to the Company’s overall profitability. We continue to target a production rate towards 100,000 ounces on an annualized basis. Our updated Life of Mine plan, based upon our newly expanded reserves and resources, expected in the fourth quarter, will provide us with further strategic opportunities and will include all recent drilling results.”

Summary of Financial and Operational Results:

Plutonic Gold Operations

The Plutonic Gold Operations produced and sold 15,196 and 16,726 ounces of gold, respectively, for the second quarter of 2022, a decrease of 21% and 14% respectively over the comparative prior-year period due to the processing lower grade ore and the shift in mining activity from Plutonic East and Perch open pits to the development of the Main Pit Deeps project, which was impacted by heavy rainfall during the quarter. Total cash costs¹ of $1,748/ounce sold and AISC¹ of $1,929/ounce sold. Cash costs were below and AISC¹ was above the realized gold price¹ of $1,877/ounce for the three-month period ending June 30, 2022.

In comparison, 19,356 and 19,099 ounces of gold were produced and sold, respectively for the second quarter of 2021. Total cash costs¹ of $1,412/ounce sold and AISC¹ of $1,519/ounce sold were below the realized gold price¹ of $1,801/ounce for the three-month period ending June 30, 2021.

Total cash costs¹ and AISC¹ increased over the prior period primarily as a result of fewer ounces sold in the current quarter due to the processing lower grade ore and the shift in mining activity from Plutonic East and Perch open pits to the development of the Main Pit Deeps project, which was impacted by heavy rainfall during the quarter, which reduced production and the number of gold ounces available for sale.

The Company generated a net loss from operations of $2.5 million for the three months ended June 30, 2022.

Exploration Activities

During the quarter, the Company announced results of extension and infill drilling results for the Indian Access area located between the Caribbean and Indian mining areas at Plutonic. (Please refer to the news release dated May 31, 2022).  The drill intersections expand both the Caribbean and Indian zones which are located directly adjacent to existing underground infrastructure requiring minimal capital to develop. The Indian Access mining area is under-explored and remains open along strike and both up and down dip as it has yet to be fully drill tested.

2022 Guidance Adjustment

After reviewing operations and considering any further potential disruptions the Company felt it prudent to revise its 2022 production guidance.  The revised guidance details of production and cost guidance for the year are summarized in the table below.

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.

Plutonic Gold Mine Main Mill (CNW Group/Superior Gold)