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)
TORONTO, Nov. 18, 2020 /CNW/ - Superior Gold Inc.
("Superior Gold" or the "Company") (TSXV: SGI) today announced its
financial and operating results for the third quarter ended
September 30, 2020.
Third Quarter Highlights:
- Produced 15,699 ounces of gold and sold 15,492 ounces of
gold
- Record realized gold price1 of $1,756 per ounce sold
- Total cash costs1 of $1,471 per ounce sold and all-in sustaining
costs1 ("AISC") of $1,617
per ounce sold, both negatively impacted by strengthening of the
Australian dollar – AISC impacted by approximately $130 per ounce relative to the second quarter of
2020
- Stope grade increased by 23% relative to the second quarter as
the Company focuses on higher margin ounces
- Development grade also significantly improved by 36% relative
to the second quarter
- Operating cash flow after working capital changes of
$0.4 million, after repayment of
$2.0 million under the Company's
short-term gold loan (scheduled to be repaid by June 30, 2021)
- Net loss for the period of $0.02
per share and adjusted net loss1 of $0.01 per share
- Preliminary Economic Assessment ("PEA") for the Plutonic Main
Pit push-back was commissioned and is well underway
Highlights Subsequent to Quarter End:
- Closed an equity financing on October
29, 2020 for gross proceeds of C$17.3
million
- Strong cash position subsequent to the aforementioned
financing
"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 ("MD&A") 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:
|
Three
months
ended
September 30,
2020
|
Nine
months
ended
September 30,
2020
|
All amounts in $
millions except where noted
|
|
|
Financial
|
|
|
Revenue
|
27.2
|
78.7
|
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
|
|
|
|
Operational2
|
|
|
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
($/ounce)1
|
1,471
|
1,393
|
AISC
($/ounce)1
|
1,617
|
1,524
|
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.
Exploration Activities
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.
Outlook
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:
2020
Guidance
|
Guidance
(July 30,
2020)
|
Revised
Guidance
(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.
|
Conference Call
Management will host a conference call and webcast on
Wednesday November 18, 2020 at
10:00AM ET to discuss the third
quarter 2020 financial and operating results.
Conference Call and
Webcast
|
|
Date:
|
Wednesday November
18, 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=1397462&tp_key=077bf37614
|
Conference Call
Replay
|
|
Toll-free North
America:
|
(855)
859-2056
|
Local or
International:
|
(416)
849-0833
|
Passcode:
|
1248469
|
The conference call replay will be available from 1:00PM ET on November 18,
2020 until 23:59PM ET on
December 2, 2020.
The presentation will be available on the Company's website at
www.superior-gold.com.
______________________________________________
(1)
|
Refer to the Non-IFRS
Performance Measures disclosure included in the Company's MD&A
for a description and calculation of these measures.
|
(2)
|
Numbers may not add
due to rounding.
|
(3)
|
Surface material
milled in the third quarter 2020 is primarily the processing of
low-grade stockpile.
|
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 executing of a
strategic review process currently underway, 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