Superior Gold (SGI) - New CEO to Deliver Super Pit & Increased Grade

Superior Gold is a Canadian-based gold producer that runs operations at the fully-owned Plutonic Gold Mine in Western Australia. The site is historically known for being one of the largest gold producers in the region. The company is listed on the Canadian Stock Exchange (TSX-V: SGI).

We met with Tamara Brown, Director, Superior Gold who joined us from Perth,  Australia. Tamara served as an interim CEO for the company before the appointment of Chris Jordaan. She is a mining industry professional with a career spanning over 25 years in the mining and financial sectors. She also serves as an Investor Relations Consultant for multiple junior exploration companies and investment banking firms.

Company Overview

Superior Gold is a gold production company founded in 2016, headquartered in Canada. The company's flagship project is the Plutonic Gold Mine based in Western Australia. Billabong Gold Pty Ltd. is a subsidiary of the company. The company's stock is currently trading at a price of CAD $0.68.

The company's business strategy features 4 pillars

•   Commencing the underground operations

•   The open pits

•   The second mill

•   Utilizing the upgraded infrastructure for further exploration

Superior Gold recently appointed Chris Jordaan as the CEO of the company. Chris has over three decades of international processing and mining industry experience. He has previously worked with some of the largest gold mining companies in Australia. He has a strong background in operations and strategy. Chris is currently exploring the possibility of bulk-mining certain areas of the deposit.

The Plutonic Gold Mine

This project is located in the Goldfields of Western Australia. It has been in operation since 1990 and has produced 6Moz gold. This historical site was previously owned by Barrick, with a production capacity of 330,000oz gold on a yearly basis.

Western Australia is known for being one of the most mining-friendly jurisdictions in the world. The government and the local communities have provided substantial support in the company's exploration pursuits.

Superior Gold has made significant infrastructure upgrades at the site and is currently producing a supply of 70,000oz. The company is seeking to raise the overall supply to 100,000oz - 150,000oz. They currently have an underground open pit along with a potential M&A belt consolidation.

Capital Raised

Superior Gold currently has a market cap of $19M. The company raised capital in 2020 to eliminate its 2% NSR (Net Smelter Return). They were also able to pay off the entirety of their gold loan. The capital raised was invested towards an underground mining fleet and the purchase of a third drill rig dedicated towards exploration.

There have been significant improvements in the company's balance sheet and they are projected to add free cash flow to the bottom line in Q3 2021. This cash flow will drastically reduce the company's capital and operational costs.

PEA Findings

Superior Gold has completed a PEA (Preliminary Economic Assessment) on their main pit which has lead to an evaluation of $120M. Currently, the company is seeking to improve its geological model along with increasing production, cutting overhead costs, and bringing highly skilled team members on board. 

The company expects to uncover significant deposits as the geological model is further optimized. This has the potential to grow the existing ore supply by a remarkable margin.

Drilling Pursuits

Superior Gold is currently focused on two regions, the underground Western mining front, and the Baltic Gap. The company purchased a third drill rig that is dedicated to exploration.

The company recently released strong drill results with a big system of 5Moz supply of M&I (Management and Information) resources.

The company has historically mined the main pit located at Plutonic East and plans to drill across the region. There are indications of the presence of a super pit which the company is looking to discover through their exploration program. Mafi is a mineralized mine that extends throughout the property.

The surface supply for the Plutonic site is targeted for over 1Moz supply. This is based on the estimations carried out by the geologist teams previously working under Barrick. The geologists were able to achieve a 100% hit rate in Q1 during one of the drill programs, and as the geological model continues to evolve, more discoveries are expected to be uncovered.

Superior Gold's current pace of drilling stands at 30,000m annually. Being a significant land package, two drills are being utilized simultaneously, one underground and the other at the surface. The company plans on utilizing the third drill rig to double its underground targets.

The company has a significant milling capacity through the ownership of two mills. The first mill is fully utilized with the existing underground and main pit supply. The second mill has a 1.2Mt annual capacity which will be used for processing supplies from future discoveries.

The site has over 3 decades of mining in the region where the paddocks feature 0.7g. deposits. The company is looking to install a flotation cell in front of the circuit to warrant bringing the historical site back into production.

Targets 2021 and Beyond

The company's business operations consist of the underground area, the open pit, the second mill, and exploration programs. The first mining site is situated in area 4 and the company intends to explore Perch Gold Mine following this program.

The company posted a reserve update in December 2020. Currently, they are carrying out 3D modeling and additional tests to analyze the existing block model. The next reserve update is planned for Q2 2021.

In 2021, the major focus is on mining Plutonic East, the company's first open-pit production. Q1 2021 had a major focus on step-out drilling in the western and the Baltic region. In Q2 2021, the company is preparing a mine plan along with infill drilling.

In 2022, Superior Gold has planned exploration of the Hermes South site. In Q4 2021, the company will start drilling deposits in and around the area. Hermes South is a project that is low CapEx (Capital Expenditure) along with a low strip and a good grade. It is located within close proximity to several satellite pits offering potential opportunities for discoveries.

To find out more, go to the Superior Gold website