SIGNIFICANTLY INCREASING PROJECTED CASH
FLOW
(In U.S. Dollars unless otherwise
stated)
TORONTO, Nov. 30, 2020 /CNW/ - Superior Gold
Inc. ("Superior Gold" or the "Company") (TSXV: SGI) is
pleased to announce that it has provided the required notice under
its asset purchase agreement with Northern Star Resources
Limited ("Northern Star") to repurchase the 2% net smelter return
royalty (the "Northern Star Royalty") on future gold recovered from
the Plutonic Gold Operations for $4.6
million (AUD$6.5 million). The Northern Star Royalty
has a value of $7.1 million (AUD$10
million)1 and its repurchase is expected to improve the
Company's projected cash flow by at least $2
million2 over the next twelve months.
Tamara Brown, Interim CEO of
Superior Gold stated: "We are very pleased to be repurchasing the
Northern Star Royalty, an immediately accretive transaction that
significantly improves the projected cash flow from Plutonic over
the next few years. We see the removal of this royalty as an
important value enhancement for Superior Gold shareholders as a 2%
royalty of this nature is customarily valued at a range
of 10-20 times cash flow."
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 timing and the completion of
the Offering. Forward-looking information also includes
information related to the Company's previously announced 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. Readers are encouraged to refer to the Annual
Information Form of the Company for a discussion of other risks
including outbreaks or threats of outbreaks of viruses, other
infectious diseases or other similar health threats, such as the
novel coronavirus 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 not 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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1 As disclosed in the Company's
Financial Statements. As part of the Plutonic Gold Operations
acquisition, the Company agreed to pay Northern Star a 2% net
smelter return royalty on future gold recovered in excess of a
cumulative 300,000 ounces. The Northern Star Royalty terminates on
the earlier of: (i) the date that a cumulative AUD$10 million is
paid to Northern Star under the royalty, or (ii) gold in excess of
a cumulative 600,000 ounces being produced. The Company maintains
the right to purchase the Northern Star Royalty from Northern Star
following the date that the first royalty payment is made to
Northern Star. In July 2020, the Company reached the 300,000 ounce
trigger and made the first royalty payment to Northern Star on
October 29, 2020. The purchase price for the royalty is AUD$6.5
million less the amount of the first royalty payment made to
Northern Star, due 15 business days after notification of
repurchase.
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2 Based on
the Company's 2020 public guidance production estimate and spot
gold prices.
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SOURCE Superior Gold