Superior Gold (SGI) - Turnaround Story Starting to Take Hold
Superior Gold is a Canadian based gold producer that owns and operates 100% of the Plutonic Gold operations located in the world-class goldfields of 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. The Plutonic mine has been in continuous production since 1990 and, having produced ~6 million ounces of gold, is one of Western Australia's largest historic gold producers.
Superior Gold bought the Plutonic asset in 2017 from Northern Star and are conducting a turnaround, with respect to getting the operation going again. They are focused on several different areas including an underground operation producing Gold, new open pits and an opportunity for a second mill and then on to finding the next big discovery.
We caught up with Tamara Brown, Interim CEO of Superior Gold Inc. which has done a fantastic job with their turnaround exercise at Plutonic. The company is bringing in a new CEO at the end June this year and we are looking forward to seeing how that goes. We also discussed the quarterly results which are quite impressive.
Turnaround Success: Quarterly Results
Since Tamara Brown started at Superior Gold, the company has focused on getting back to basics with respect to the geology and the mine but it doesn't happen overnight. They have had quarter-on-quarter improvements but saw a jump in production level in Q1 to just over 17,600oz. This starts to show that they have an asset which can produce a significant amount of free cashflow and it is what investors really needed to see in order to start to build that confidence and belief in the project.
Setting the Foundations: Focus, Money Allocation, & Pace
When Tamara came on board, the company decided to invest some money into revitalizing their underground mining fleet. They brought in 2 new trucks and 2 new loaders. They also bought back a Royalty on the property and got a third drill rig, which is completely dedicated to exploration.
In the first quarter, there were 7 holes in the drilling programme and all 7 holes hit significant mineralization. With advancement in technology, they have the ability to incorporate all historical geological data into the database with 3D modelling which informs mine planning. Superior Gold plans to use 3D modelling across the whole ore body to improve mine planning and drill targeting.
Future Growth & the Next Phase: Progress with the Open-Pit
The next phase is the open pit at Platonic East which comes online mid-year. They’re on track to deliver that which will be supplemental ore to feed to the mill. It will double the grade, so more profitable tons will be going through the mill which is important. The 3D modelling doesn't only work in the underground, it also helps with the open pits as well.
The last time we spoke at the beginning of April, the Superior Gold share price was at USD$0.64c and it is $0.80c today, which is a 25% Improvement.
Candidates for the CEO Role: Why Doesn't Tamara Stay On?
Superior Gold believes that bringing in an experienced operator as the CEO will increase turnaround efficiency even further. Tamara is still going to be on the board with input into the strategy piece, which she is passionate about. Having an operator on the ground in Perth is what the company needs to increase the speed at which they achieve their deliverables. The company has found someone for the CEO role which is being finalised at the moment and by July 31st, the shareholders will know exactly what is happening with respect to the business moving forward.
Exploration Plans & Budget
Superior Gold put in a drill rig dedicated to underground exploration which is a big system. They could now facilitate a second drill rig, and the results warrant it, so by mid-year, a surface drill rig is coming in for the infill drilling with the opportunity to uncover both an excellent underground operation with exploration upside and also a brand-new open-pit surface plan for shareholders. It has the ability to turn this story very quickly.
Expectations for the Next Couple of Months
In the next couple of months before the new CEO becomes part of the team, it is business as usual for Superior Gold. There's no reason to be slowing down whilst they are waiting for the CEO to be in position. We are looking forward to news on all fronts and following the Superior Gold story going forward.