GENERATED FREE CASH FLOW AND THREE
CONSECUTIVE QUARTERS OF CONTINUED OPERATIONAL
IMPROVEMENTS
(In US Dollars unless otherwise
stated)
TORONTO, May 11, 2021 /CNW/ - Superior Gold Inc.
("Superior Gold" or the "Company") (TSXV: 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.
|
Conference Call
Management will host a conference call and webcast on
Tuesday May 11, 2021 at 10:00AM ET to discuss the first quarter 2021
financial and operating results.
Conference Call and
Webcast
|
Date:
|
Tuesday May 11, 2021
10:00AM ET
|
Toll-free North
America:
|
(888)
231-8191
|
Local or
International:
|
(647)
427-7450
|
Webcast:
https://produceredition.webcasts.com/starthere.jsp?ei=1453972&tp_key=d5db020b86
|
Conference Call
Replay
|
|
Toll-free North
America:
|
(855)
859-2056
|
Local or
International:
|
(416)
849-0833
|
Passcode:
|
6557249
|
The conference call replay will be available from 1:00PM ET on May 11,
2021 until 23:59PM ET on
May 25, 2021.
The presentation will be available on the Company's website at
www.superior-gold.com.
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.
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.
Forward-looking information includes information with respect to
guidance as to projections, outlook, guidance, forecasts,
estimates, and other statements regarding future or estimated
financial and operational performance, gold production and sales,
revenues and cash flows, and capital costs (sustaining and
non-sustaining), including projected cash operating costs and
all-in sustaining costs) as well as statements with respect to the
mine-plan, exploration, drilling, operating and organizational
matters and activities relating to the Plutonic Gold Operations and
the Company generally, including its liquidity and capital
requirements and financial results. Such 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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SOURCE Superior Gold