- RECORD REVENUE OF $115.6 MILLION
ACHIEVES FULL YEAR REVISED PRODUCTION AND COST GUIDANCE
(In US Dollars unless otherwise stated)
TORONTO, March 13, 2020 - Superior Gold Inc. ("Superior Gold" or the "Company") (TSXV: SGI) announced today its financial and operating results for the fourth quarter and year ended 2019. 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 December 31, 2019. These documents will be posted on the Company's website at www.superior-gold.com and SEDAR at www.sedar.com.
Full Year Highlights:
•Production of 83,035 ounces of gold which generated record revenue of $115.6 million
•Record realized gold price1 of $1,387 per ounce
•Cash, cash equivalents and restricted cash of $22.3 million at year end
Fourth Quarter Highlights:
•Produced 20,084 ounces of gold representing a 21% increase over the prior quarter
•Sold 18,899 ounces of gold at an average record realized gold price1 of $1,478 per ounce
•Delivered a 5-year underground mine plan for Plutonic underground in October 2019
•Completed the AUD$15 million Auramet gold loan financing in November 2019
Chris Bradbrook, President and CEO of Superior Gold stated: "We are pleased to report record revenues for 2019 which was the result of achieving our full year revised production and cost guidance coinciding with a record realized gold price. We exited the year with a cash balance of $22.3 million. Looking ahead, our focus in 2020 remains on completing the development work required to execute our five year underground Life of Mine ("LOM") plan that was announced in late 2019. The rising gold price environment, especially in terms of the Australian dollar denominated gold price, continues to put us at an advantage relative to our peer group.
In the January 15, 2020 press release, where the Company's 2020 guidance was outlined, it was indicated that the first quarter of 2020 would be the weakest of the year as most of the production during that quarter was planned to source mineralized areas that are outside of the LOM plan. Additionally, the Plutonic Gold operations suffered some unexpected power outages and higher than anticipated arsenic content in some of the mined areas, which exhibited lower recoveries, in addition to heavy rains delaying production. These combined to lower our anticipated production from the quarter to between 15,000 to 16,000 ounces. However, with a continued emphasis on improved underground development rates and the execution of our five year LOM plan, we anticipate a progressive improvement in our quarterly production results over the course of 2020 and beyond."
The Company will announce the results of its 2019 Year End Reserves and Resources Estimate in early second quarter of 2020 along with its plan for the open pit operations.
Summary of Financial and Operational Results:
Three months ended December 31, 2019 Twelve months ended December 31, 2019
All amounts in $ millions except where noted
Revenu 28.0 115.6
Cost of sales 29.1 122.7
General and administrative 1.2 3.8
Operating income (loss) (3.1) (13.6)
Income (loss) before taxes (3.6) (14.7)
Net income (loss) (3.4) (12.0)
Earnings (loss) per share - basic and diluted (0.03) (0.12)
Adjusted net income (loss)1 (3.2) (11.6)
Adjusted net income (loss) per share - basic1 (0.03) (0.12)
Cash flow from operations 10.5 15.9
Weighted average number of common shares outstanding (basic) 96,982,473 96,864,062
Gold produced (ounces) 20,084 83,035
Gold sold (ounces)2 18,899 83,241
Total cash costs ($/ounce)1,2 1,317 1,284
All-in sustaining costs ($/ounce)1,2 1,424 1,387
Average realized price1 ($/ounce) 1,478 1,387
Total underground material mined (Kt) 214 808
Total material milled (Kt) 418 1,681
Grade milled (g/t gold) 1.8 1.8
Recovery (%) 84 86
Plutonic Gold Operations
The Plutonic Gold operations produced and sold 20,084 and 18,899 ounces of gold, respectively, for the fourth quarter of 2019. Total cash costs1 of $1,317/ounce sold and all-in sustaining costs1 of $1,424/ounce were below the realized gold price1 of $1,478/ounce for the three-month period ending December 31, 2019. Had gold sales been able to match production, both total cash costs1 and all-in sustaining costs1 would have been lower. Additionally, production costs were negatively affected by the costs of processing Hermes stockpiled material. In comparison, 20,541 and 19,305 ounces of gold were produced and sold, respectively for the fourth quarter of 2018. Total cash costs1 of $1,442/ounce sold and all-in sustaining costs1 of $1,577/ounce were above the realized gold price1 of $1,237/ounce for the three-month period ending December 31, 2018.
Total cash costs and all-in sustaining cash costs decreased over the prior period primarily as a result of an increase in underground tonnes processed at higher grade, partially offset by lower grades and fewer tonnes from the Hermes stockpiles. The variance from prior period for underground tonnes milled was caused by more available stopes to be mined as the Company focused its efforts on development and sequencing necessary to deliver on the new long-term plan released on October 23, 2019.
The Company generated net cash from operations after working capital changes of $10.5 million for the three months ending December 31, 2019 after factoring in the gold loan financing with Auramet.
The Plutonic Gold operations produced and sold 83,035 and 83,241 ounces of gold, respectively, for the twelve months ended December 31, 2019. Total cash costs1 of $1,284/ounce sold and all-in sustaining costs of $1,387 were below and equal to, respectively, the realized gold price1 of $1,387/ounce for the twelve-month period ending December 31, 2019. In comparison, 90,101 and 89,884 ounces of gold were produced and sold, (including 4,968 pre-production Hermes ounces) respectively for the twelve months ended December 31, 2018. Total cash costs1 were $1,155/ounce sold and all-in sustaining costs were $1,266/ounce in comparison to the realized gold price1 of $1,265/ounce for the twelve-month period ending December 31, 2018.
Total cash costs and all-in sustaining cash costs increased over the prior period primarily due to higher payroll, maintenance and mining costs, despite an increase in tonnes milled. Partially offsetting these increases were lower General and administrative costs. Lower General and administrative costs was due to lower compensation and consulting costs in 2019. The reduction stems from the finalization of senior management's short-term incentive compensation in 2019 as a result of short-term incentives not being awarded to executives for 2018 performance and higher consulting costs in the first three months of 2018 due to administrative projects, which did not reoccur in the first quarter of 2019.
The Company generated net cash from operations after working capital changes of $15.9 million for the twelve months ended December 31, 2019.
During the fourth quarter, the Company announced results from the ongoing underground diamond drill program focused on reserve and resource expansion. The drilling was targeting potential extensions to the Baltic mineralization.
The drilling was focused on the area between the deepest parts of the Baltic Zone and the upper parts of the Baltic Deeps Zone, where no previous drilling had taken place. The deepest mining to date (700 metres) previously took place at the Baltic Zone. Additionally, the drilling was targeting the hanging wall area of the Baltic Zone where only limited drilling had taken place.
The following key findings were noted:
•39 intersections encountered more than 5g Au/t
•22 intersections encountered more than 10g Au/t
•9 intersections encountered more than 25g Au/t
•3 intersections encountered more than 50g Au/t
•3 intersections encountered more than 100g Au/t
Highlights of the drill results included:
•26.0 g Au/t over 5.55 metres
•210.0 g Au/t over 0.6 metres
•13.2 g Au/t over 6.7 metres
The drilling was completed over a strike length of more than 150 metres and a vertical extent of more than 100 metres where mineralization remains open up and down dip and along strike. The Company expects to release other drilling results in some of the other key areas of the LOM plan, including Timor, Indian and Baltic in the near future.
The Company intends to focus on re-establishing the Plutonic Gold Operations as a stable gold producer capable of producing at least 100,000 ounces of gold annually. To achieve this goal, the Company intends to focus on its growth strategy which includes:
•Delivery on its 5-year guidance for the underground operations as announced in its press release dated October 23, 2019
•Improve reconciliation between mined and reserve/resource grade
•Improve mining practices to minimize dilution and increase grade
•Improve maintenance and equipment availability
•Focus on open pit opportunities with the most optimal financial returns
•Accelerate exploration activities in 2020
With the Company's cash position and the ongoing cash from operations, the Company will continue towards executing on these growth and exploration objectives.