(In US Dollars unless otherwise
stated)
TORONTO, Aug. 11, 2020 /CNW/ - Superior Gold Inc.
("Superior Gold" or the "Company") (TSXV: SGI) announced today its
financial and operating results for the second quarter 2020. This
release should be read in conjunction with the Company's Management
Discussion and Analysis ("MD&A") and consolidated financial
statements for the quarter ended June 30,
2020. These documents will be posted on the Company's
website at www.superior-gold.com and SEDAR at www.sedar.com.
Second Quarter Highlights:
- Successfully maintained operations safely through COVID-19
pandemic
- Produced 15,177 ounces of gold, down 7% from the first quarter
of 2020 and down 36% from the comparable period in 2019
- Sold 15,536 ounces of gold at total cash costs1 of
$1,426 per ounce sold and all-in
sustaining costs1 of $1,547 per ounce sold which were below the record
realized gold price1 of $1,608 per ounce sold
- Operating cash flow before working capital changes of
$0.6 million and after the repayment
of $1.9 million under the gold
loan
- Net loss for the period of $0.00
per share and adjusted net loss1 of $0.01 per share
- Ended the second quarter with $15.6
million in cash
- Advanced underground optimization plan:
-
- Achieved record underground tonnes mined, an increase of 51%
over the prior quarter
- Improved development rates, averaging 789 metres per month
- Enhanced mine plan accuracy by incorporating constrained
wire-frame block models
- High-grade exploration drill results reported included (refer
to Exploration Activities section):
-
- 56.3 g Au/t over 15.10 metres
- 40.4 g Au/t over 6.50 metres
- 10.2 g Au/t over 7.10 metres
Highlights Subsequent to Quarter End:
- Announced a 29% increase in Measured and Indicated Resources
and a 55% increase in Inferred Resources
- Announced a leadership change and the initiation of a Strategic
Review Process
Tamara Brown, Interim CEO of
Superior Gold stated: "The highlight of our second quarter results
was the stope tonnage mined which increased by 51% over the first
quarter of this year and was the highest quarterly mining rate
since we acquired the Plutonic underground mine in 2016. We
continue to be encouraged by the underground physicals of the
operations and believe, with the execution of our five-year
underground plan, the stope grade will progressively improve over
time.
We are encouraged that despite continuing to invest in
exploration and development and repaying our gold loan, our cash
position remained largely unchanged from the first quarter, as we
continue to benefit from the strong Australian dollar gold price,
which is currently at all time highs. Over the next twelve months,
we are focused on executing on a cost reduction program that
targets higher grade stopes while improving productivity, which we
expect will allow us to generate meaningful free cash flow for our
shareholders as our operations continue to improve.
We are very excited by our recent exploration results. During
the quarter, we announced intersections of up to 56.3 g Au/t over
15.10 metres in the area between the Indian and Baltic Zones, which
represents our best drill results since acquiring the asset (refer
to the Press Release on June 17,
2020). Subsequent to quarter end, we announced our updated
reserve and resource estimate in which we achieved a 29% increase
in Measured and Indicated Resources to 1.59 million ounces and a
55% increase in Inferred Resources to 2.82 million ounces across
our projects (refer to the Press Release on July 21, 2020). These results confirm that
Plutonic is a large mineralized system with significant upside and
long term potential."
Subsequent to the quarter, the Company announced a leadership
change and a strategic review process that will explore all
alternatives to maximize value for our shareholders (refer to the
Press Release on July 30,
2020). The Company does not intend to comment further unless
the Board of Directors of the Company has approved a specific
course of action or the Company has determined further disclosure
is appropriate.
Summary of Financial and Operational Results:
|
Three
months
ended
June 30,
2020
|
Six
months
ended
June 30,
2020
|
All amounts in $
millions except where noted
|
|
|
Financial
|
|
|
Revenue
|
25.0
|
51.5
|
Cost of
sales
|
24.2
|
47.9
|
General and
administrative
|
0.7
|
1.7
|
Operating income
(loss)
|
(0.4)
|
0.7
|
Income (loss) before
taxes
|
(0.3)
|
(4.1)
|
Net income
(loss)
|
(0.4)
|
(4.2)
|
Earnings (loss) per
share - basic and diluted
|
(0.00)
|
(0.04)
|
Adjusted net income
(loss)1
|
(0.6)
|
(0.7)
|
Adjusted net income
(loss) per share - basic1
|
(0.01)
|
(0.01)
|
Cash flow from
operations before working capital changes
|
0.6
|
1.7
|
Cash and cash
equivalents
|
15.6
|
15.6
|
Weighted average
number of common shares outstanding (basic)
|
97,134,473
|
97,100,231
|
|
|
|
Operational
|
|
|
Gold produced
(ounces)
|
15,177
|
31,528
|
Gold sold
(ounces)
|
15,536
|
32,386
|
Total cash costs
($/ounce)1
|
1,426
|
1,356
|
All-in sustaining
costs ($/ounce)1
|
1,547
|
1,479
|
Average realized
price1 ($/ounce)
|
1,608
|
1,588
|
Total underground
material mined (Kt)
|
183
|
304
|
Total material milled
(Kt)
|
394
|
760
|
Grade milled (g/t
gold)
|
1.4
|
1.6
|
Recovery
(%)
|
84
|
83
|
Plutonic Gold Operations
The Plutonic Gold Operations produced and sold 15,177 and 15,536
ounces of gold, respectively, for the second quarter of 2020. Total
cash costs1 of $1,426/ounce sold and all-in sustaining
costs1 of $1,547/ounce
were below the realized gold price1 of $1,608/ounce for the second quarter of 2020. In
comparison, 23,849 and 23,937 ounces of gold were produced and
sold, respectively for the second quarter of 2019. Total cash
costs1 of $1,222/ounce
sold and all-in sustaining costs1 of $1,293/ounce were below the realized gold
price1 of $1,320/ounce for
the three-month period ending June 30,
2019.
Total cash costs and all-in sustaining cash costs increased over
the prior period primarily as a result of no contribution of
tonnages milled from Hermes for the period (the Company ceased
mining operations at Hermes in May
2019), a decrease in underground grade and the processing of
other low grade stockpiles, partially offset by higher underground
tonnes milled. The variance from the prior period for underground
grade was the result of mining lower grade out of reserve and
inferred material in some stopes.
The Company generated net cash from operations after working
capital changes of $0.6 million for
the second quarter of 2020, after the repayment of $1.9 million under the gold loan.
Exploration Activities
On June 17, 2020, the Company
announced results from the ongoing underground diamond drill
program focused on reserve and resource expansion at its 100%-owned
Plutonic Gold mine. The drilling was targeting potential extensions
to the gold mineralization within the Indian Zone.
The drilling was focused on the area to the northwest of the
Indian Zone within an area that extends approximately 500 metres
between the Indian and Baltic Zones which has yet to be fully drill
tested.
The following key findings were noted:
- Demonstrates the potential to extend and connect the Indian and
Baltic Zones
- Drill hole UDD22011 intersected 56.3 g Au/t over 15.10 metres
representing the best drill intersection ever achieved since the
Company acquired the Plutonic underground mine
- The drilling was completed over a strike length of
approximately 200 metres and a vertical extent of more than 100
metres.
- Mineralization remains open both up and down dip and along
strike, resides close to existing infrastructure, and is only
approximately 600 metres from surface
On June 24, 2020, the Company
announced results from drilling that targeted potential extensions
to the gold mineralization in the area between the Baltic and Baltic Deeps Zones. The drilling
was focused on the area vertically between the Baltic and Baltic Deeps mineralized zones
which has not previously been tested.
The following key findings were noted:
- Continues to demonstrate potential continuity of mineralization
between Baltic and Baltic Deeps
Zones
- Drill hole UDD22310 intersected 40.4 g Au/t over 6.50 metres
including 232.0 g Au/t over 0.90 metres
- Drill hole UDD22309 intersected 12.4 g Au/t over 4.10
metres
- Mineralization remains open both up and down dip and along
strike
The Indian and Baltic Zones are key targets for future
exploration activities.
Outlook
The Company intends to focus on establishing the Plutonic Gold
Operations as a gold producer capable of producing at least 100,000
ounces of gold annually. To achieve this goal, the Company intends
to:
- Continue to improve the reconciliation between the underground
grade mined and reserve grade
- Improve mining practices to lower costs and increase
production
- Increase operational efficiencies
- Continue optimization of the global resource model
- Advance open pit opportunities close to the mill
On July 30, 2020, the Company
announced revised 2020 production guidance as follows:
2020
Guidance
|
Original
|
Revised
|
Production (oz of
Gold)
|
80,000 -
90,000
|
60,000 -
70,000
|
Cash Costs
($/oz)1
|
$975 -
$1,075
|
$1,250 -
$1,350
|
All In Sustaining
Costs ($/oz)1
|
$1,075 -
$1,175
|
$1,350 -
$1,450
|
Filing of Technical Report
The Company is announcing the filing of a technical report to
support its previously released Mineral Reserve and Resource update
on its Plutonic Gold operations (the "Report") entitled, "2020
Mineral Resource and Reserve Estimate for the Plutonic Gold
Operations". The Plutonic Gold operations are located in
Western Australia and are
comprised of the 100%-owned Plutonic underground gold mine, the
100%-owned Hermes open pit gold project, along with the Company's
interest in the Bryah Basin joint venture.
The Report, which is dated August 7,
2020 and is effective December 31,
2019, was prepared in compliance with National Instrument
43-101 - Standards for Disclosure for Mineral Projects ("NI
43-101") and is available under Superior Gold Inc.'s profile on
SEDAR at www.sedar.com and on the Company's website at
www.superior-gold.com.
The Report was prepared by Stephen
Hyland, FAusIMM, BSc (Geology); Matthew Keenan, MAusIMM (CP), BEng; and
Ashutosh Srivastava, FAusIMM, B.
Tech. (Mining Engineering); all of whom are "qualified persons"
within the meaning of NI 43-101. With the exception of the open pit
Mineral Reserve estimates, the Qualified Persons who have approved
the disclosure of the sections of the Technical Report referred to
above are independent of the Company within the meaning of NI
43-101.
The Report supports the scientific and technical disclosure in
the updated Mineral Resource and Mineral Reserve estimates
contained in the Company's press release dated July 21, 2020.
Conference Call
Management will host a conference call and webcast on
Tuesday August 11, 2020 at
10:00AM ET to discuss the second
quarter 2020 financial and operating results.
Conference Call and
Webcast
|
|
Date:
|
Tuesday August 11,
2020 10:00AM ET
|
|
Toll-free North
America:
|
(888)
231-8191
|
|
Local or
International:
|
(647)
427-7450
|
|
Webcast:
https://produceredition.webcasts.com/starthere.jsp?ei=1343215&tp_key=66a388e6c0
|
|
|
|
Conference Call
Replay
|
|
Toll-free North
America:
|
(855)
859-2056
|
|
Local or
International:
|
(416)
849-0833
|
|
Passcode:
|
6264678
|
|
The conference call replay will be available from 1:00PM ET on August 11,
2020 until 23:59PM ET on
August 25, 2020.
The presentation will be available on the Company's website at
www.superior-gold.com.
_________________________________________________________
|
|
|
(1)
|
This is a Non-IFRS
measure. Refer to the Non-IFRS Performance Measures disclosure
included in the Company's MD&A for a description and
calculation of these measures.
|
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 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.
Forward Looking Information
This news release contains "forward-looking information" within
the meaning of applicable securities laws that is intended to be
covered by the safe harbours created by those laws.
"Forward-looking information" includes statements that use
forward-looking terminology such as "may", "will", "expect",
"anticipate", "believe", "continue", "potential" or the negative
thereof or other variations thereof or comparable terminology. The
forward-looking information contained herein includes, without
limitation, information related to the Company's plans to carry out
a strategic review process, the potential outcome of such process
and the intended maximization of shareholder value that the Company
believes may result from such process. By identifying such
information in this manner, the Company is alerting the reader that
such information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking information.
Forward-looking information is not a guarantee of future
performance and is based upon a number of estimates and assumptions
of management at the date the statements are made. Furthermore,
such forward-looking information involves a variety of known and
unknown risks, uncertainties and other factors which may cause the
actual plans, intentions, activities, results, performance or
achievements of the Company to be materially different from any
future plans, intentions, activities, results, performance or
achievements expressed or implied by such forward-looking
information. See "Risk Factors" in the Company's prospectus dated
February 15, 2017 filed on SEDAR at
www.sedar.com for a discussion of these risks. In addition,
The Company is exposed to outbreaks or threats of outbreaks of
viruses, other infectious diseases or other similar health threats,
including the novel coronavirus ("COVID-19") outbreak, which could
have a material adverse effect on the Company by causing
operational and supply chain delays and disruptions, labour
shortages, shutdowns, the inability to sell gold, capital markets
volatility or other unknown but potentially significant impacts.
The Company cannot accurately predict what effects these conditions
will have on the Plutonic Gold Operations or the financial results
of the Company, including uncertainties relating to travel
restrictions to the Plutonic Gold Operations or otherwise and
business closures that have been or may be imposed by governments.
If an outbreak or threat of an outbreak of a virus or other
infectious disease or other public health emergency occurs, it
could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company cautions that there can be no assurance that
forward-looking information will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such information. Accordingly, investors should not
place undue reliance on forward-looking information as no assurance
can be given that any of the events anticipated by the
forward-looking information will transpire or occur, and if any of
them do so, what benefits the Company will derive therefrom. Except
as required by law, the Company does not assume any obligation to
release publicly any revisions to forward-looking information
contained in this news release to reflect events or circumstances
after the date hereof.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the Exchange)
accepts responsibility for the adequacy or accuracy of this
release.
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SOURCE Superior Gold