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Superior Gold Reports Strong First Quarter Results

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Superior Gold Reports Strong First Quarter Results

 

 

 

 

 

Superior Gold Inc. (TSX-V: SGI) announces financial results for the first quarter of 2021 for the Company’s 100%-owned Plutonic Gold Operations, located in Western Australia.

 

First Quarter Highlights

 

  • Increased production by 11% over the fourth quarter of 2020 to 17,603 ounces, with sales of 17,538 ounces
  • Improved stope grade by a further 13% to 3.5 g/t gold representing an improvement for a third consecutive quarter
  • Increased milling recoveries to 86%, in part due to the finalization of re-commissioning of the gravity circuit in the fourth quarter of 2020
  • Realized a record average gold price of $1,777/oz above All-In Sustaining Cost1 (“AISC”) of $1,510/oz, a 10% reduction from the fourth quarter of 2020
  • Net income for the period of $0.03 per share and adjusted net income of $0.01 per share
  • Significantly improved cash flow from operations to $4.9 million before changes in working capital and gold loan repayment
  • Generated free cash flow2 increasing the cash position at quarter end to $17.9 million in cash and cash equivalents
  • Repaid $2.2 million of the Auramet gold loan, with the remaining $2.0 million scheduled to be fully repaid by June 30, 2021
  • Announced positive exploration results, establishing two new mining fronts, results included 21.8 g/t gold over 8.3 metres at the Baltic Gap Mining Front3 and 13.7 g/t gold over 8.8 metres at the Western Mining Front4
  • Recorded zero incidences of COVID-19 infection for a fifth consecutive quarter

 

Tamara Brown, Interim CEO of Superior Gold stated: “Our first quarter results are a significant improvement and begin to highlight the full potential of Plutonic. We are delighted to report our third quarter-over-quarter increase in production as well as a meaningful decrease in AISC over the prior quarter. The operational initiatives that we put in place last year are resulting in a steady improvement in our mined stope grade, which has increased for a third consecutive quarter and represents a 47% improvement relative to the second quarter of 2020, after which we initiated the changes at the Company. Pleasingly, this operational improvement is driving cash flow from operations of close to $5 million, with the resultant free cash flow further improving our cash position.

 

_____________________________
1 This is a Non-IFRS measure. Refer to Non-IFRS measures section of the Company’s MD&As for a description of these measures.
2 Free cash flow is defined as cash from operating activities less expenditures on mineral interests and property, plant and equipment.
3 Refer to the Company’s news release on March 29, 2021 for additional information.
4 Refer to the Company’s news release on March 1, 2021 for additional information.

 

In addition, we have further advanced our geological understanding of the Plutonic orebody, including the northwest trending faults that control the location and concentration of higher-grade gold mineralization. This has led to a number of strategically significant exploration results, demonstrating that there are a number of new high-grade mining fronts potentially opening at Plutonic, as well as the identification of higher-grade stopes on the operational front. Over the coming quarters, we will continue to advance these improvements in our geological modelling and look forward to providing further exploration updates.

 

We also continue to advance the strategic projects necessary to reposition Plutonic for sustainable, long term success. The restart of open pit mining is on target to begin mid-year at Plutonic East. The displacement of low-grade stockpile with higher grade open pit feed, in conjunction with the opening of new underground mining fronts, is expected to continue to improve our grade profile moving forward.

 

Finally, we will continue to remain focused on optimizing the underground operation and incorporating new sources of open pit feed to increase our production levels, while further advancing our understanding of the extensions of the mineralization at Plutonic. We expect that these improvements, combined with the upcoming full repayment of our gold loan in June, will drive a continued improvement in our financial performance over the course of 2021 and beyond.”

 

 

Summary of Financial and Operational Results:

 

Three months
ended March 31,
2021
All amounts in $ millions except where noted
Financial
Revenue 31.2
Cost of sales 26.9
General and administrative 1.5
Operating income (loss) 2.2
Income (loss) before taxes 3.6
Net income (loss) 3.5
Earnings (loss) per share – basic and diluted 0.03
Adjusted net income (loss)1 1.8
Adjusted net income (loss) per share – basic1 0.01
Cash flow from operations 4.0
Weighted average number of common shares outstanding (basic) 121,806,195
Operational
Gold produced (ounces) 17,603
Gold sold (ounces) 17,538
Total cash costs ($/ounce)1 1,386
All-in sustaining costs ($/ounce)1 1,510
Average realized price1 ($/ounce) 1,777
Total underground material mined (Kt) 187
Total material milled (Kt) 356
Grade milled (g/t gold) 1.8
Recovery (%) 86
1 This is a Non-IFRS measure. Refer to Non-IFRS measures section of the Company’s MD&As for a description of these measures.

 

Plutonic Gold Operations

 

The Plutonic Gold Operations produced and sold 17,603 and 17,538 ounces of gold, respectively, for the first quarter of 2021, an increase of 8% and 4% respectively over comparative prior year period. Total cash costs5 of $1,386/ounce sold and AISC5 of $1,510/ounce sold were below the realized gold price5 of $1,777/ounce for the three-month period ending March 31, 2021.

 

In comparison, 16,351 and 16,850 ounces of gold were produced and sold, respectively for the first quarter of 2020. Total cash costs5 of $1,291/ounce sold and AISC5 of $1,416/ounce sold were below the realized gold price5 of $1,570/ounce for the three-month period ending March 31, 2020.

 

Total cash costs5 and AISC5 increased over the prior period primarily as a result of the strengthening of the Australian dollar relative to the U.S. dollar, which alone added $206/ounce and $215/ounce, respectively, in comparison to the first quarter of 2020.

 

The Company generated net cash from operations, after working capital changes and after the repayment of $2.2 million to Auramet under the gold loan, of $4.0 million for the three months ending March 31, 2021.

 

Exploration Activities

 

During the first quarter of 2021, the Company released two exploration updates containing important high-grade drill results from its underground drill program as part of its strategy to identify new mining fronts to allow for improved mining grades and productivity and reduced reliance on remnant mining.

 

The Company announced results from the Western Mining Front, northwest of the Baltic zone, which were highlighted by 13.7 g/t gold over 8.8 metres (UDD23656) and 52.7 g/t gold over 1.0 metres (UDD23653)6. These intercepts are outside of existing Mineral Resources but are within only 50 metres of existing infrastructure and can therefore be accessed with minimal capital. Encouragingly, it is worth noting that all of the drill holes completed to target depth hit significant intercepts.

 

Towards the end of the first quarter, the Company announced results from the Baltic Gap, which were highlighted by 21.8 g/t gold over 8.3 metres and 13.4 g/t gold over 5.0 metres (UDD23880) and 20.7 g/t gold over 2.1 metres (UDD23820)7. The results represent the identification of a potential new mining front with mineralization extending up to 165 metres outside of the current Mineral Resource envelope. Similar to the results released last year, which were highlighted by 40.4 g/t gold over 6.5 metres (UDD22310)8, these latest intercepts are outside of existing Mineral Resources, but are within only 50 metres of existing underground infrastructure.

 

_____________________________
5 This is a Non-IFRS measure. Refer to Non-IFRS measures section of the Company’s MD&As for a description of these measures.
6 Refer to the Company’s news release on March 1, 2021 for additional information.
7 Refer to the Company’s news release on March 29, 2021 for additional information.
8 Refer to the Company’s news release on June 24, 2020 for additional information.

 

 

2021 Guidance

 

The Company continues to maintain its 2021 guidance which was previously announced on January 21, 2021. Details of production, cost and capital expenditure guidance for the year are summarized in the table below.

 

 

Operating Parameters Low High
Production (oz of Gold) 65,000 75,000
Cash Costs ($/oz)1, 2 $1,350 $1,450
All In Sustaining Costs ($/oz)1, 2 $1,500 $1,600
Exploration Expenditure ($ million)3 $3.5-6.5M
Sustaining Capital Expenditures ($ million) $4.0-4.5M
Non Sustaining Capital Expenditures ($ million)4 $3.0-5.0M
1 Assumes AU$:US$ exchange rate of 0.73:1.
2 This is a Non-IFRS measure. Refer to Non-IFRS measures section of the Company’s MD&A’s for a description of these measures.
3 Exploration expenditures could increase with positive exploration results.
4 Non sustaining capital expenditures are primarily related to pre-production capital for Plutonic East and underground development.

 

Qualified Person

 

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 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, 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.

 

Posted May 11, 2021

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