Superior Gold

A business first, gold company second

 


 

Canada-based miner Superior gold classes itself as ‘a business first, gold company second’ and is solely focused on its 100% owned Plutonic Gold operations in the world class goldfields of Western Australia. The Plutonic Gold operations include the Plutonic underground gold mine (with central mill), the Hermes open pit gold mine and an interest in the Bryah Basin joint venture. In the view of CEO and president Chris Bradbrook, a lot of gold companies talk about how many ounces they produce and not necessarily about the cost of getting there. “We follow a mantra where we want to make money and so we focus on the bottom line. Gold production is almost a by-product of that approach,” he explains. 

 

“Everything has a cost per ounce including management, and that is why from day one, we have been very focused on minimising G&A (General & Administrative) expenses.  

 

“Our strategy is predicated on managing costs and optimising production, which means making as many ounces as you can at the biggest possible margin.” 

 

A brief glance at a comparison chart for G&A costs per ounce of gold production amongst Superior and its peers reveals that the strategy is paying off, with US$47 per ounce spent on G&A in 2017, just under half the average of $97 per ounce spent by competing gold firms. 

 

Last year, the company exceeded guidance in its first full year of production, producing over 80,000 ounces of gold solely from its Plutonic underground gold mine. The company’s near-term objective is to increase production to a sustainable 100,000 ounces per annum (pa) with the expected contribution from its Hermes mine, which entered commercial production in March 2018. 

 

Superior was initially a numbered private company that was formed by Bradbrook specifically for the acquisition of the Plutonic Gold operations from Australian gold producer Northern Star. After acquiring the asset in October 2016 Bradbrook began to build the management team with Paul Olmsted, previously of IAMGOLD, appointed as CFO. 

 

The company inherited its current general manager of the Plutonic Gold operations, Frederick Labuschagne, along with the asset and has since added a few extra members to complete a lean management team, which helps keep G&A expenses down. 

 

In February 2017, Superior went public via an IPO on the TSX Venture Exchange with a goal to raise C$15 million. The market float attracted around C$75 million subscriptions, from which the company took C$32.5 million – a result that Bradbrook deems a big success.  

 

“We were lucky with the timing as the start of 2017 was a good time for gold mining. Toronto is still the mining finance capital of the world and I think that Toronto is the best place to list any mining company, not just a gold miner. 

 

Plutonic 

 

The Plutonic Gold mine has been in continuous operation since 1990, with open pit mining running until 2005 and underground production commencing in 1995. During this time, Plutonic has produced around 5.5 million ounces (Moz) of gold, making it the sixth largest historic producer in Western Australia.  

 

Superior’s CEO and president says that the sheer scale and further exploration potential of the asset was a major attraction during the acquisition hunt, as was its location in the mining-friendly, low sovereign risk state of Western Australia. 

 

“We’ve seen it lots of times when companies work in these big systems and focus on exploration. They drill holes and end up finding even more ore. That was the potential we saw in Plutonic and there is nothing that we have discovered since taking it over that has changed that view.” 

 

The Plutonic mine has eight active mining zones. However, exploration has been prevalent across the entire underground mine complex as the company continues to announce high grade drill results on a monthly basis.  

 

On the operational side, Superior has significantly optimised the performance of the Plutonic Gold operations since taking control of the asset, with ore recoveries increasing over the last four consecutive quarters.  

 

In the most recent quarter (Q2 2018), recovery rates hit 90%, increasing from 76% in the corresponding quarter twelve months earlier. Further improvements are also expected throughout the rest of the year after Superior announced it had completed the construction of a gravity circuit at the Plutonic mill. 

 

For Bradbrook, these operational improvements are an outcome of the company’s meticulous focus on optimisation and managing expenses: “It’s all about cost management and focusing hard on what we are mining.”  

 

“We took over an asset that was being mined too fast and had too many people working on site. I am proud that we were able to really right-size the scale of the workforce and the scale of production from underground.” 

 

However, he credits the former owner of Plutonic with taking the first steps to improving its operational performance. “Northern Star had been making these changes while we were negotiating the price and they actually gave us the management team for it, so this was another element that was attractive to us.” 

 

Hermes  

 

Superior also brought its Hermes mine, located 65 km Southwest of the Plutonic Gold mine, into full commercial production in March. This was a major milestone for the company as it was able to fully fund, construct and then ramp up production from the development stage in less than 18 months. 

 

“This is a significant achievement because it has changed the perception of the overall Plutonic project, as previously people looked at it as a dying asset.  

 

“As part of Superior, production at Plutonic has increased for the first time in a long time and the incremental production from the pit should allow us to achieve our near-term objective with production of at least 100,000 ounces per year.” 

 

With increasing production from the Plutonic underground and Hermes open pit mines, Superior has been able to increase throughput at the mill from approximately 800,000 tonnes pa to close to full capacity of 1.8 million tonnes (Mt) pa. 

 

Next, Superior will aim to ‘fill the mill at the best possible grade’, which reinforces the company’s ultimate strategy of managing costs and optimising production. 

 

“For example, if we could get more underground feed from Plutonic at a better grade than some of the ore from Hermes, than we would displace that Hermes ore with the higher grade. 

 

“This is because if you fill the mill with the best possible grade, you produce the maximum number of ounces at the lowest cost,” explains Bradbrook. 

 

Hermes is also providing fertile ground for exploration, with the potential to grow the resource through near-mine targets including Hermes South, where the company hopes to establish a new gold frontier. 

 

“Once Hermes is depleted, Hermes South will potentially be the next pit. We are also beginning to put together a detailed exploration programme around the Plutonic mine itself where we think there is a lot of high grade prospective targets.” 

 

In April, the company announced an initial inferred mineral resource estimate for Hermes South of 1.29 Mt at 1.54 g Au/t for 64,000 ounces (100% basis) and later published a string of encouraging results from a reverse circulation drill programme that was completed in May. 

 

The highest grade intersections were found to be both outside and parallel to the existing resource 150 metres South, indicating the possibility of outlining additional parallel zones. The results from this campaign suggest the potential to increase the existing resource at Hermes South.  

 

Going into the next 12 months, Superior is highly focused on hitting its production target of 100,000 ounces of gold pa across the Plutonic Gold operations and could surpass this figure with the additional production coming from the commercially producing Hermes mine.  

 

Overall, Superior is well placed to achieve this short-term goal, and the long-term growth of the business looks secure with a host of open exploration targets across the Plutonic Gold operations. 

 

Superior’s achievements are even more impressive given that all endeavours thus far have been fully funded with no debt attached to the company. 

 

“We are extremely pleased with how we have run the company since taking it over. Often companies like ours that start out with a single asset have to raise money two or three times to get to where they want to be. We have been able to do it with our own money.”