Superior Gold Focused on Returning to Growth Trajectory After Challenging Q2

• Superior Gold (SGI) discusses Q2 results and growth strategy progress.
• Positive highlights include improved safety performance and reduced injury frequency rate.
• Challenges faced: Impact of COVID-19 on operations, fluctuating infection rates affecting productivity.
• Heavy rainfall in the region led to operational disruptions due to flooding, affecting accessibility and production.
• Despite lowered guidance and increased costs, the company is focused on improving grade, production, efficiency, and overall performance.

About Superior Gold

Superior Gold is a Canadian-based gold producer focused on re-starting production at the Plutonic Gold operations in Western Australia. The company aims to build a sustainable mid-tier gold producer with an initial focus on the Plutonic Gold operations.

Interview with President & CEO Chris Jordaan

Superior Gold's Growth Strategy Delayed by Challenging Q2

Superior Gold recently announced its financial and operational results for the second quarter of 2022. The results highlighted some challenges during the quarter that impacted production and costs. However, CEO Chris Jordaan reiterated the company's focus on getting back on track towards its goal of achieving an annualized production rate of 100,000 ounces.

The two major events affecting Q2 performance were the impacts of COVID-19 and excess rainfall. After COVID restrictions were lifted in Western Australia, Superior Gold saw COVID absenteeism spike, with 12% to 40% of personnel affected for more than two weeks. This significantly reduced workforce productivity and throughput.

The area also saw 143mm of rain over a few days compared to a May average of 15mm. This heavy rainfall flooded the region, closing the airport and access roads for over two weeks. Open pit mining was halted, and underground productivity was reduced.

Focusing Efforts on Returning to Growth Trajectory

While Q2 performance was disappointing, Jordaan emphasized the company's continued commitment to its growth strategy. He pointed to key focus areas management is working on to get operations back on track:

• Increasing underground mine development rates to improve underground ore feed and mill grades
• Advancing open pit benches to reach higher grade ore zones
• Realizing benefits from recent mill upgrades and maintenance to maximize mill throughput
• Replacing aging mobile equipment to improve equipment availability and utilization
• Identifying opportunities to improve efficiencies and reduce costs through initiatives in the underground, open pit and processing plant

Jordaan expressed confidence that executing on these operational focuses will accelerate the path to achieving the targeted 100,000 ounce annual production rate.

Managing Cost Pressures

In addition to impacting production, COVID and weather challenges increased operating costs in Q2 to over $1,800 per ounce sold. With inflationary pressures, Superior Gold is intensely focused on managing and reducing costs.

Initiatives are underway across the operations targeting improved productivity, equipment utilization, and lower external spending. The company is also reviewing contractor rates and leveraging opportunities to reduce overhead costs like corporate travel.

While these individual cost initiatives may seem small, together they aim to create meaningful reductions in Superior Gold's cost profile. Management remains adamant that driving efficiencies through operational improvements and technology adoption will be key to counteracting cost inflation pressures.

Cautious Optimism for the Future

The setbacks in Q2 were no doubt disappointing and delayed Superior Gold's growth plans. However, Jordaan maintained cautious optimism on the path forward. He pointed to the recently increased mineral reserve estimate and new life of mine plan underway as sources of additional growth potential.

Jordaan also noted that challenging market conditions have impacted many junior gold producers, not just Superior Gold. The focus for management remains steadfast on executing initiatives within their control to return the operations to stable, profitable production of 100,000 ounces per year.

There is still hard work ahead, but the building blocks and strengthened team give confidence that Superior Gold's growth trajectory can get back on track. For investors looking to add high-upside gold exposure, Superior Gold provides an opportunity worth monitoring.

Conclusion

Despite a disappointing Q2 performance, Superior Gold's management team remains focused on initiatives to return the company to its targeted growth path. While inflationary pressures persist, the company continues working to maximize efficiencies, productivity and cost control. For risk-tolerant investors, Superior Gold offers leveraged upside potential as operations normalize.