Superior Gold

Strong fundamentals in place for this Western Australian gold producer



Superior Gold is a Canadian gold producer that owns the Plutonic Gold operations, comprised of the Plutonic underground mine, central mill and the Hermes open pit projects, in the tier one jurisdiction of Western Australia (WA). The Plutonic mine has been in continuous production since 1990 and has produced over 5.5 million ounces of gold during this time, making it one of WA’s largest historic gold producing mines. TSXV-listed Superior aims to produce 80-90,000 ounces of gold in 2020, which would provide the base for the company to ultimately deliver its stated goal of producing 100,000 ounces per annum through the addition of satellite open pit operations 


In the second half of 2019, Superior made the difficult decision to sacrifice short-term results at the Plutonic operations in order to ensure its long-term success, posting a revised annual production target of 80-85,000 ounces following weaker production in the third quarter. 


The company recovered in Q4 to meet its revised annual guidance with 83,035 ounces of gold produced over the 12 months ending December 2019, although by then the focus had shifted to a freshly devised five-year plan for the underground life of mine (LOM) starting in 2020. 


“We identified some issues in the middle of last year but if you look at our quarterly performance, we’ve gradually been working towards overcoming those challenges and setting ourselves on a path to the profitability that we saw back in 2017,” says Superior’s president and CEO Chris Bradbrook. 


Going underground  


The five-year plan outlines a number of ways in which Superior will optimise the Plutonic underground mine in order to achieve average production from underground alone of 70-85,000 ounces per annum up to 2024. 


Superior will increase efficiencies by focusing on four mining fronts instead of eight under the previous mode of operation. In order to achieve this, Superior will boost development rates from 600 metres per month to more than 800 metres per month. 


Other parameters outlined in the five-year plan include a stope grade of 3.5-4.5 grams per tonne, all-in sustaining costs averaging less than US$1,100 per ounce, and a commitment to spend US$6.5 million per year on exploration at Plutonic. 


“The five-year plan is all about ensuring that the development in front of us will enable us to maximise grade and enhance flexibility. The ultimate cost reduction is always achieved by maximising grade, because our underground mining costs remain pretty constant, so reduction in unit cost per ounce is all about improving the grade. 


The total underground resource is substantially larger than the quantity of mineralisation included in the LOM, and the expectation is that the ultimate mine life is longer than the five years covered by the LOM. 


Corporate reshuffle 


The company’s five-year plan is a result of detailed analysis and work completed since Superior appointed Keith Boyle as chief operating officer (COO) in April last year. Boyle’s appointment was enacted by Superior in 2019 after determining that the company needed an extra layer of operational expertise and oversight. 


Keith brings an extra level of operational skill that allows us to focus and keep on track. As part of our new focus, we also added a new general manager last September, Alan Breen. He has got excellent international experience but it was Keith who became the catalyst for the upgrade of the entire operations team.”  


While bringing in new corporate direction last year, the company has maintained its focus on keeping general and administrative (G&A) costs down. In fact, G&A costs per ounce at Superior have remained the lowest among its peer group since the company went public in February 2017. 


“Everything has a per ounce cost, including management and that has been a mantra of ours since I started the company,” Bradbrook proclaims. That’s what we wanted to do, so that culture is very much ingrained in Superior. 


The open pit opportunity 


Alongside the new plan for the underground mine at Plutonic, Superior expects to be able to add ounces to its production through the addition of several open pit deposits. The company started commercial gold production from the Hermes open pit in March 2018 but suspended operations in May 2019 ahead of its new five-year plan. 


Superior is currently working on the optimisation of its open pit resources, including the Hermes deposit, which will potentially be combined with the Hermes South project to create a single operation. A resource update for the open pits is expected towards the end of the first quarter or the beginning of the second quarter. 


It’s not just the Hermes pit, there are a number of pits which will be included once we finalise the resource update.  We expect to put out a revised plan for the open pits soon which will look at adding around 20-30,000 ounces per annum from open pit resources. Considering our 7085,000 ounces underground target in the LOM, you can see that those combined could get us over 100,000 ounces sustainably.” 


Currently, it is anticipated that production from the Plutonic East/Perch pit could commence during the second half of 2020, once final mining permits have been received. Other near-term open pit resources include the Salmon and Workshop deposits. 


Further resource growth 


Superior is also chasing near surface and underground reserve and resource growth this year and is in the process of creating a five-year exploration plan to run alongside the five-year underground mining plan. 


Most of the easytoreach near surface resources at Plutonic have already been identified according to Bradbrook, but Superior’s chief is keen for the company to look for other Plutonic-type targets in the area. 


Its about thinking big and making sure that wherever we drill, we find mineralisation. We think this is a large system and there is a good possibility of finding additional resourcesWe will be targeting the favourable mafic volcanic host rock and the key structural settings. 


Meanwhile, underground resource expansion has been a key focus for Superior since it took over the Plutonic operations, and this commitment to underground exploration has been underlined in the company’s five-year mining plan.  


Back in October, COO Keith Boyle revealed that Superior’s immediate underground focus would be on establishing four key mining fronts, which would make the area between the Indian and Baltic zones an area of significant interest, as it is a zone which has received limited exploration and development to date. 


IDecember 2019, the company announced positive results from this area which illustrated the potential to extend the LOM plan to well beyond five years. Highlights of the drill results included: 1) 26.0 g Au/t over 5.55 metres; 2) 210.0 g Au/t over 0.60 metres; and 3) 13.2 g Au/t over 6.7 metres. 


Following the announcement, Bradbrook described these results as pleasing and said Superior will continue to release drill results in some of the other key areas of the LOM plan, including Timor, Indian and Baltic, in the near future. 


Filling the mills 


Superior is also undertaking a calculation of a new global resource for the Plutonic mine, the results of which will ultimately be incorporated into a longerterm planCrucially for the company, it has access to a second mill within the Plutonic premises, which will allow it to easily ramp up should extra resources be discovered. 


The second mill has a capacity of 1.2 million tonnes per annum and is currently on care and maintenance but can be brought back online with minimal capex spend, according to the company. Bradbrook believes the possession of an additional mill is a key differential for Superior in the gold space. 


The gold price is very impressive right now. If we are in a prolonged period of high gold prices, you want to be able to deliver the maximum amount of gold into that. Most other companies don’t have the capacity to do that, whereas we do. We can add more ounces into a strong gold market very quickly and with minimal capex. 


Considering the strong fundamentals  such as a high gold price and operating in a strong mining jurisdiction – underpinning the company, Bradbrook appears enthusiastic about Superior’s future. 


We are in a tier one jurisdiction and we have got one of the biggest gold systems in WA, which is Australia’s biggest gold producing district. We also have infrastructure that allows us the expand rapidly and at low capital. I think we are extremely well placed in the current gold market.