ENHANCED CASH FLOW FROM OPERATIONS AND
GROWING CASH POSITION
(In US Dollars unless otherwise
stated)
TORONTO, March 8, 2022 /CNW/ - Superior Gold Inc.
("Superior Gold" or the "Company") (TSXV: SGI) (OCTMKTS: SUPGF)
announces financial results for the fourth quarter and full-year
2021 for the Company's 100%-owned Plutonic Gold operations, located
in Western
Australia.
Fourth Quarter Highlights
- Production of 20,983 ounces, a 32% increase over the
comparative quarter of 2020
- Sold 21,143 ounces of gold at a realized gold price of
$1,786 per ounce, resulting in an
AISC margin2 of $370 per
ounce
- Reduced all-in sustaining costs1 ("AISC") by
$269 per ounce or 16% to $1,416 per ounce, reduced total cash
costs1 by $276 per ounce
or 18% to $1,290 per ounce, in
comparison to the fourth quarter of 2020, despite a significant
increase of $22/oz in sustaining
exploration and capital1
- Cash flow from operations, after working capital changes, of
$8.5 million, an increase of
$15.2 million from the fourth quarter
of 2020, exiting the quarter with a strong financial position of
$23.8 million in cash and cash
equivalents and a working capital1 position of
$10.4 million
- The Company is now an unhedged producer following the delivery
of the remaining ounces under call options related to the repaid
Auramet gold loan
- Net income for the period was $0.03 per share and Adjusted net
income1 was $0.03 per
share
- Gold recovery rates increased to 87% in Q4 2021 from 84% in Q4
2020
- Appointment of Vice President, Investor Relations
Full-Year Highlights
- Exceeded top end of 2021 production guidance with 77,321 ounces
produced, a 23% increase over the prior year, and came in below the
bottom end of 2021 AISC1 guidance
- Sold 77,061 ounces of gold at a realized gold price1
of $1,784 per ounce, generating
revenue of $137.7 million
- Reduced AISC1 by $92
per ounce or 6% to $1,472 per ounce,
reduced total cash costs1 by $81 per ounce or 6% to $1,355 per ounce over the same period in 2020,
despite the strengthening of the Australian dollar in the first
half of 2021
- Cash flow from operations, after working capital changes,
excluding the gold loan repayment of $4.4
million to Auramet was $26.0
million, which is a record for the Company
- Net income for the year of $0.08
per share and Adjusted net income1 of $0.07 per share vs. net loss for the year of
($0.05) per share and Adjusted net
income 1of ($0.04) per
share in 2020
- Gold recovery rates increased to 87% in 2021 from 83% in
2020
- Fully repaid the gold loan with Auramet and settled all
remaining gold call options to end the year as an unhedged gold
producer
- Began mining of the Plutonic East and Perch open pits and
announced an early entry into the main pit deeps in 2022
- Continued exploration success along the Western Mining Front
and the Indian Access Mining Front
1. This is a
Non-IFRS measure. Refer to the Non-IFRS measures section of the
Company's prior MD&As for a description of these
measures.
|
2. AISC margin is
calculated as realized gold price per ounce less AISC per
ounce
|
Chris Jordaan, President, and CEO
of Superior Gold stated: "We are pleased to report strong
fourth-quarter financial and operating results, successfully
achieving the first goal of our growth strategy to delivering a
safe, stable and predictable operation producing between
70-85koz/a. The Company exceeded annual production guidance for
2021 while realizing a seventh consecutive quarter of improving
gold production and cash position at our Plutonic Gold Operations.
We will continue to focus on operational initiatives with the goal
of further reducing costs as we progress into 2022.
With our improved operating performance and the full repayment
of the gold loan at the end of the second quarter of 2021,
operating cash flow for the fourth quarter of 2021 increased to
$8.5 million after working
capital changes an increase of $15.2
million from the same period in 2020. This demonstrates the
ability of Plutonic to generate meaningful cash flow when
performing at consistent levels and is a testament to the site
team's continued successful execution of the improvement
initiatives we put in place. I am also pleased to report that the
Company will see a significant tightening of our share structure
with the recent expiration of 14.4 million acquisition warrants,
and the expiration of 4.8 million options by the end of the first
quarter of 2022, which will benefit existing shareholders.
The improvement initiatives that the Company has made continue
to positively contribute to our operating results and to our
underground stope grade which has remained above 3.0 g/t on
average. We also continue to see increases in our surface grades by
further optimizing open pits. Looking ahead to 2022, we will be
advancing many value-enhancing projects that we believe will
further increase production, lower costs and extend our mine life.
The Company also continues with resource block modeling
improvements designed to better predict the spatial positioning of
the ore at Plutonic. As a result, larger more productive stopes are
now being identified, developed, and mined. This is evidenced by
the continued increase in tonnage mined from underground stopes in
each quarter of 2021 with the full year stope tonnage production up
8% over 2020. The Company is targeting further increases in
underground production in 2022. We remain fully committed to
repositioning the asset to focus on higher grade, higher-margin
ounces that will continue with a state of significant free cash
flow generation at Plutonic going forward.
Summary of Financial and Operational Results:
|
Three
months
ended December
31,
2021
|
Twelve
months
ended December
31,
2021
|
All amounts in $
millions except where noted
|
|
|
Financial
|
|
|
Revenue
|
37.8
|
137.7
|
Cost of
sales
|
29.4
|
114.2
|
Exploration
expense
|
1.1
|
3.1
|
General and
administrative
|
1.3
|
5.8
|
Operating income
(loss)
|
6.0
|
14.6
|
Income (loss) before
taxes
|
6.1
|
13.7
|
Net income
(loss)
|
4.1
|
9.9
|
Earnings (loss) per
share - basic and diluted
|
0.03
|
0.08
|
Adjusted net income
(loss)1
|
3.9
|
9.1
|
Adjusted net income
(loss) per share - basic1
|
0.03
|
0.7
|
Cash flow from
operations
|
8.5
|
21.5
|
Weighted average
number of common shares outstanding (basic)
|
122,735,058
|
122,172,874
|
|
|
|
Operational
|
|
|
Gold produced
(ounces)
|
20,983
|
77,321
|
Gold sold
(ounces)
|
21,143
|
77,061
|
Total cash costs
($/ounce)1
|
1,290
|
1,355
|
All-in sustaining
costs ($/ounce)1
|
1,416
|
1,472
|
Average realized
price1 ($/ounce)
|
1,786
|
1,784
|
Total underground
material mined (Kt)
|
222
|
832
|
Total material milled
(Kt)
|
389
|
1,509
|
Grade milled (g/t
gold)
|
1.9
|
1.8
|
Recovery
(%)
|
87
|
87
|
1 This is a
Non-IFRS measure. Refer to the Non-IFRS measures section of the
Company's prior MD&As for a description of these
measures.
|
Plutonic Gold Operations
The Plutonic Gold Operations produced and sold 20,983 and 21,143
ounces of gold, respectively, for the fourth quarter of 2021. Total
cash costs1 of $1,290/ounce sold and AISC1 of
$1,416/ounce were below the realized
gold price1 of $1,786/ounce for the three-month period ending
December 31, 2021. In comparison,
15,838 and 15,855 ounces of gold were produced and sold,
respectively for the fourth quarter of 2020. Total cash
costs1 of $1,566/ounce
sold and AISC1 of $1,685/ounce were below the realized gold
price1 of $1,726/ounce for
the three-month period ending December 31,
2020
Total cash costs1 and AISC1 decreased by
18% or $276 per ounce sold and 16% or
$269 per ounce sold, respectively
despite an increase of $22/oz in
sustaining exploration and capital, over the prior period primarily
as a result of increased underground tonnages and higher-grade open
pit material mined leading to an increased milled grade and
subsequently higher number of ounces of gold sold. The
decrease in all-in sustaining cash costs1 was partially
offset by higher sustaining exploration and capital
expenditures1 in comparison to the fourth quarter of
2020.
The Company generated net cash from operations after working
capital changes of $8.5 million for
the three months ending December 31,
2021, up $15.2 million from
the fourth quarter of 2020.
Year to date performance Summary
The Plutonic Gold Operations produced 77,321 ounces and sold
77,061 ounces for the twelve months ended December 31, 2021, representing a year-over-year
increase of 23% and 21% for each respectively. Total cash
costs1 of $1,355/ounce
sold and AISC1 of $1,472/ounce were below the realized gold
price1 of $1,784/ounce for
the twelve-month period ending December 31,
2021. Total cash costs and AISC reduced 6% respectively
during the twelve months ended December 31,
2021, from the same period a year ago, despite the
strengthening of the Australian dollar
Total cash costs1 and AISC1 decreased over
the prior period primarily due to a greater contribution of
higher-grade stope material and open-pit material from the Plutonic
East and Perch pits that reduced the proportion of lower grade
legacy stockpiles being milled. Also, improved recovery rates
and a higher number of ounces of gold sold contributed to lower
costs which were partially offset by the strengthening Australian
dollar which increased the Cost of sales and higher general and
administrative costs.
The Company generated net cash from operations after working
capital changes, excluding the gold loan repayment of $4.4 million to Auramet of $26.0 million for the twelve-month period ending
December 31, 2021, compared to
$1.4 million in 2020.
1 This is a
Non-IFRS measure. Refer to the Non-IFRS measures section of the
Company's prior MD&As for a description of these
measures.
|
Exploration Activities
During the three months ended December
31, 2021, the company reported progress for two exploration
programs. Results were reported for 43 holes totaling 6,874
meters.
The first set of results, reported on November 29, 2021, was for the continued
significant intersects the Company realized while continuing to
open the 1.6-kilometre-long western mining front. A total of 20
underground exploration drill holes, were drilled from August to
October 2021, for a total of 2,939
metres of drilling. This drilling was focused on extending
and infilling the Western Mining Front, which includes the Baltic
West and Baltic West Extension Zones. The Western Mining Front is
yet to be fully drill tested and remains open along strike and both
up and down dip.
The second set of results reported on December 13, 2021, extended high-grade
mineralization within the Indian Access zone which is close to the
current portal at the Plutonic Mine. A total of 23 underground
exploration drill holes, were drilled through to October 2021, for a total of 3,935 metres of
drilling. Drilling was focused on extending and infilling
known mineralization in the Indian Access area, located between the
existing Caribbean and Indian
mining areas at Plutonic. The Indian Access mining area is
under-explored and remains open along strike and both up and down
dip as it is yet to be fully drill tested. The Indian Access mining
area increased in priority following a reinterpretation of
mineralization controls particularly given its proximity to
existing infrastructure and surface. This area of interest
represents a footprint of approximately 400 metres by 200 metres
between existing development and a potential new mining front that
is separate from the previously announced Western Mining Front.
The Company has prioritized exploration in 2022 and has an
increased budget for exploration of between $8.0 to $10.0
million. Continued exploration of the western mining
front will continue as well as Indian access and there will be
additional exploration at potential new open-pit targets.
2022 Guidance
The Company previously provided its 2022 guidance on
January 17, 2022. Details of
production, cost, and capital expenditure guidance for the year are
summarized in the table below. It is anticipated that the first
quarter will be the weakest for 2022 due to a planned 14-day
maintenance shutdown on the SAG mill to perform preventative
maintenance on the foundation and rotating equipment in
anticipation of higher throughput rates. It is however expected
that production will progressively improve as the Company increases
production tonnages from the underground and accesses higher grade
open-pit material from Main Pit Deeps.
The Company aims to increase the annualized production rate to
100,000 ounces in the second half of 2022. Furthermore, our 2022
guidance reflects additional investment to open new underground
mining fronts identified from the successful 2021 exploration
program, plus the continued development and mining of open pit
targets, expected to result in an improvement in the Company's
grade profile. The Plutonic underground mine is expected to mine up
to 30% of the ore from new areas, a significant improvement when
compared to 100% remnant mining in 2021. With improved production,
costs should reduce further. Capital spending is set to increase
relative to 2021 as the Company proceeds with investments in
operations to unlock additional value. These investments are
designed to deliver the Company's strategy to fully optimize the
underground operation and when combined with the addition of new
sources of open-pit feed, are expected to positively contribute to
the Company's overall profitability.
2022 Operating
Parameters
|
Low
|
High
|
Production (oz of
Gold)
|
80,000
|
90,000
|
Cash Costs
($/oz)1
|
$1,300
|
$1,450
|
All-In Sustaining
Costs ($/oz)1
|
$1,450
|
$1,600
|
1 This is a
Non-IFRS measure. Refer to the Non-IFRS measures section of the
Company's prior MD&As for a description of these measures.
Calculated at a US$/AU$ exchange rate of 0.75:1
|
2 Exploration
expenditures could increase with positive exploration
results.
|
3 Non-sustaining
capital expenditures are primarily related to underground
capitalized development for new mining fronts, pre-production
capital for Main Pit Deeps, and other site upgrades.
|
Outlook
The Company has a clear goal 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 continues to focus on:
- Targeting mine exploration programs to open new mining fronts
and reduce reliance on remnant mining whilst increasing ore
delivery from the underground
- Improving mining practices to lower costs and increase
production
- Increasing operational efficiencies, especially in the process
plant
- Continuing the optimization of the global resource model
- Optimizing costs especially in UG and OP mining, on contract
spend, labour, and maintenance
- Advancing open pit opportunities close to the mill
Conference Call
Management will host a conference call and webcast on
Tuesday, March 8, 2022, at
10:00 AM ET to discuss the fourth
quarter and full-year 2021 financial and operating results.
Conference Call and Webcast
Date: Tuesday, March 8, 2022, at 10:00
AM ET
Toll-free North America: +1 888
664 6392
Local or International: +1 416 764 8659
Webcast:
https://produceredition.webcasts.com/starthere.jsp?ei=1532229&tp_key=6a0866b763
Conference Call Replay
Toll-free North
America:
|
+1 888 390
0541
|
Local or
International:
|
+1 416 764
8677
|
Passcode:
|
740583#
|
The conference call replay will be available for 365 days.
The presentation will be available on the Company's website at
www.superior-gold.com.
Qualified Person
The scientific and technical information in this news release
has been reviewed and approved by Ettienne Du Plessis, who is a
"qualified person" as defined by NI 43-101. Mr. Du Plessis 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.
Continue to Follow, Like and Watch our progress:
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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. 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, inflationary
pressures on operating or capital costs, 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) accept responsibility for the adequacy or
accuracy of this release.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the Exchange)
accept responsibility for the adequacy or accuracy of this
release.
SOURCE Superior Gold