PI Global Investments
Gold

Superior Gold : MDA For the three and twelve months ended December 31, 2020







Management’s Discussion and Analysis

For the three and twelve months ended December 31, 2020

March 9, 2021

(Expressed in thousands of United States dollars, except where

otherwise indicated)

-2-

TABLE OF CONTENTS

Notes ———————————————————————————————————————————

3

Description of the Business —————————————————————————————————–

3

Fourth Quarter Highlights ——————————————————————————————————-

3

Full Year Highlights—————————————————————————————————————-

4

Impact of COVID-19—————————————————————————————————————

4

Key Business Developments —————————————————————————————————-

5

Plutonic Gold Operations ————————————————————————————————–

5

Exploration Activities——————————————————————————————————–

7

Outlook ——————————————————————————————————————————

7

Summary of Operational Results ———————————————————————————————-

8

Summary of Annual Financial Statistics————————————————————————————

10

Summary of Quarterly Financial Results———————————————————————————–

10

Results of Operations —————————————————————————————————–

11

Financial Condition ——————————————————————————————————–

15

Liquidity and Capital Resources —————————————————————————————-

17

Off-Balance Sheet Arrangements ————————————————————————————–

18

Commitments—————————————————————————————————————

18

Related Party Transactions—————————————————————————————————-

19

Critical Accounting Policies and use of Estimates ———————————————————————–

20

Financial Instruments———————————————————————————————————–

20

Adoption of New or Amended Accounting Policies———————————————————————

20

Recent Accounting Pronouncements—————————————————————————————

21

Outstanding Share Data ——————————————————————————————————-

21

Non-IFRS Performance Measures ——————————————————————————————-

21

Disclosure Controls and Procedures —————————————————————————————-

23

Risks and Uncertainties ——————————————————————————————————–

24

Forward Looking Information ————————————————————————————————

24

Technical Information ———————————————————————————————————-

26

Additional Information———————————————————————————————————

26

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF THE COMPANY

Notes

This Management’s Discussion and Analysis (“MD&A”) dated March 9, 2021, should be read in conjunction with Superior Gold’s audited consolidated financial statements and related notes for the twelve months ended December 31, 2020 and 2019 (“financial statements”) which are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The following is intended to supplement and complement the financial statements and notes thereto of the Corporation. All dollar figures stated herein are expressed in thousands of United States dollars, except for per share or per ounce amounts or unless otherwise specified. The Company’s public filings can be viewed on the SEDAR website (www.sedar.com) and on the Company’s website (www.superior-gold.com).

The following discussion contains forward-looking information that involves numerous risks and uncertainties. Actual future results could differ materially from those discussed in such forward-looking information as a result of these risks and uncertainties. Refer to the cautionary language at the end of this MD&A.

Description of the Business

Superior Gold Inc. (the “Company” or “Superior Gold”) is a Canadian based gold producer that owns and operates the Plutonic Gold Operations located in Western Australia. The Plutonic Gold Operations include the Plutonic Gold Mine (which is a producing underground operation), the Hermes Gold Mine (which includes open pits at Hermes and interests in tenements within the Bryah Basin joint venture ranging from 70%-80%), and a central mill (located at the Plutonic Gold Mine).

Fourth Quarter Highlights

  • Closed a bought deal share offering of over 24.6 million shares for net proceeds of $11,901 (“Bought
    Deal”)
  • Produced 15,838 ounces of gold, up 1% from the third quarter of 2020 and down 21% from the comparable period in 2019
  • Sold 15,855 ounces of gold at total cash costs1 of $1,566 per ounce sold and all-in sustaining costs1 of $1,685 per ounce sold, below the realized gold price1 of $1,726 per ounce
  • Cash flow from operations, after working capital changes, excluding the repayment of $2,088 to Auramet International LLC (“Auramet”) under the gold loan (“Gold loan”) and $4,748 for the purchase of the Northern Star Royalty (“Royalty”) was $214
  • Net income for the period of $0.01 per share and adjusted net loss of $0.01 per share as a result of mark-to-market gains on the gold call options issued in connection with the Gold loan and the gain on sale of assets of $857

1 Refer to the Non-IFRS Performance Measures disclosure included in this MD&A for a description and calculation of these measures.

-4-

Full Year Highlights

  • Sold 63,732 ounces of gold at total cash costs1 of $1,436 per ounce sold and all-in sustaining costs1 of $1,564 per ounce sold, below the realized gold price1 of $1,665 per ounce, generating revenue of $106,147
  • Cash flow from operations, after working capital changes, excluding the repayment of $7,894 to Auramet under the Gold loan and $4,748 for the purchase of the Royalty was $6,113
  • Net loss for the year of $0.05 per share and adjusted net loss of $0.04 per share
  • Announced positive results from an independent preliminary economic assessment of a potential pushback of the main pit at the Plutonic Gold Operations
  • Announced on December 2, 2020, increases in Measured and Indicated Mineral Resources of 19% to 1.89 million ounces and Inferred Mineral Resources of 9% to 3.07 million ounces prior to 2020 depletion

Impact of COVID-19

On March 11, 2020, the World Health Organization declared a global pandemic related to COVID-

19. The COVID-19 pandemic is still impacting business worldwide and current measures to combat the spread are vastly different depending on the location of an entity’s operations. The unpredictable nature of the length of the COVID-19 pandemic and the severity of measures that may be taken is subject to significant variability and accordingly, estimates as to the impact on the Company’s financial results in future periods is uncertain. The judgments, inputs and assumptions used as at December 31, 2020 and for the twelve month periods ended December 31, 2020, whether related to COVID-19 or otherwise, have been considered and, where appropriate, reflected in the consolidated financial statements. The future impact of COVID-19 actions as at December 31, 2020 are unknown.

To date COVID-19 has not had a significantly negative impact on the Company’s operations. To address the risk of the pandemic to the Plutonic Mine, the Company instituted a number of measures to reduce the potential risk to employees and communities.

Additionally, the Company has developed an Infectious Disease Management Plan following the guidelines provided by the Government of Western Australia and the Department of Mines, Industry Regulation and Safety. Part of this plan includes the appointment of an Infectious Disease Manager.

As a “Fly In, Fly Out” operation, the Company requires any employee or visitor, who has travelled from overseas, to have self-isolated for 14 days prior to flying into the Plutonic Gold operations site, as directed by Australian Government Emergency Legislation. Additionally, the same restrictions have been placed on anyone exhibiting symptoms associated with or similar to COVID-19 prior to boarding Company flights to the Plutonic Gold operations, irrespective of where they have travelled from.

Should an employee display symptoms that are consistent with COVID-19, there is an established isolation area at site until it is confirmed whether the employee has contracted COVID-19. If required, emergency MEDIVAC protocols are in place. At the start of the pandemic, employees whose work could be performed off site were instructed to work from home. Since June, all site personnel are back working at site with COVID-19 screening taking place at the airport. At the corporate level, head office staff work remotely.

1 Refer to the Non-IFRS Performance Measures disclosure included in this MD&A for a description and calculation of these measures.

-5-

The Company has had no reported incidences of infection from COVID-19 to date.

With respect to supply chain considerations, the Company has not experienced any disruptions with regards to its supply chain as a result of COVID-19 and continues to operate in a pre-COVID-19 manner albeit with an increase in inventories of critical consumables. The Company continues to work with its suppliers to ensure the ongoing availability of critical supplies. As a precautionary measure, the Company has established an inventory of key supplies at site.

As noted above, the Company has developed an Infectious Disease Management Plan which includes steps to mitigate the effects of potential supply chain disruptions. The Company sources its critical supplies within Western Australia from a number of companies and therefore has alternate sources for its critical supplies.

As a result of the increase in gold prices, the Company’s revenue stream has not been negatively impacted by COVID-19 to date and therefore has not been subject to emergency government measures to support the Company or its workers. The Company continues to monitor actions taken by governments in Australia and Western Australia, in particular, to develop plans to access any benefits that may become applicable. As noted above, the Company has been following the guidelines and legislation established by the Governments of Australia and Western Australia, to continue operating in order to produce and sell gold.

To date, the Company’s ability to meet its borrowing and leasing obligations have not been impacted by COVID-19. As a result of the increase in gold prices and the fact that Plutonic Gold Operations continue to operate, the Company is not subject to concessions from lenders, landlords, suppliers or others nor has it received permission to defer payments, at this time. Credit markets remain open and as a gold producer, management believes it has access to additional credit should it become necessary, at costs that are not prohibitive.

The Company is in compliance with all covenants, as of the date of this MD&A. Barring further negative impacts of COVID-19, the Company currently has no plans to renegotiate covenants. There is no guarantee that the Company would be successful in renegotiating covenants should the need arise.

The price of gold has increased in the three and twelve months ended December 31, 2020 over the comparable periods in 2019. This has had an effect on the Company’s Call options and have resulted in an increase in the liability associated with these Call options, which are settled at the respective strike prices according to the terms under the Auramet Gold loan (refer to notes 10 and 11 of the consolidated financial statements).

Key Business Developments

Plutonic Gold Operations

The Plutonic Gold Mine is located in the Archaean Plutonic Marymia Greenstone Belt and has been in continuous production since 1990, having produced over 5 million ounces of gold from both open pit and underground mining.

The Hermes Gold Mine (“Hermes”) is located approximately 65 kilometres south-west of the Plutonic Gold Mine. It includes the wholly-owned Hermes open pits, that until May 2019, were being

1 Refer to the Non-IFRS Performance Measures disclosure included in this MD&A for a description and calculation of these measures.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Superior Gold Inc. published this content on 14 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 July 2022 19:53:02 UTC.

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All news about SUPERIOR GOLD INC.
04:24p SUPERIOR GOLD : MDA For the three and twelve months ended December 31, 2021

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04:24p SUPERIOR GOLD : Consolidated Financial Statements December 31, 2021 and 2020

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04:04p SUPERIOR GOLD : Condensed Consolidated Interim Financial Statements September 30, 2021

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04:04p SUPERIOR GOLD : MDA For the three and six months ended June 30, 2021

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04:04p SUPERIOR GOLD : Condensed Consolidated Interim Financial Statements June 30, 2021

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03:54p SUPERIOR GOLD : MDA For the three months ended March 31, 2021 May 10, 2021

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03:54p SUPERIOR GOLD : Condensed Consolidated Interim Financial Statements March 31, 2021

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03:54p SUPERIOR GOLD : MDA For the three and twelve months ended December 31, 2020

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07/13 SUPERIOR GOLD : Condensed Consolidated Interim Financial Statements March 31, 2020

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Sales 2022 155 M

Net income 2022 13,3 M

Net cash 2022 34,8 M

P/E ratio 2022 5,14x
Yield 2022
Capitalization 66,5 M
65,6 M
EV / Sales 2022 0,20x
EV / Sales 2023 0,15x
Nbr of Employees
Free-Float 99,4%

Chart SUPERIOR GOLD INC.



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Superior Gold Inc. Technical Analysis Chart | MarketScreener



Income Statement Evolution

Sell

Buy

Mean consensus BUY
Number of Analysts 6
Last Close Price 0,54 $
Average target price 1,22 $
Spread / Average Target 125%


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