Superior beats guidance

TSXV-listed Superior Gold boosted production quarter-on-quarter from its Western Australia gold operations at Plutonic, enabling it to exceed full year guidance, but its 2022 forecast has left some disappointed.
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Superior is looking towards a brighter future

Haydn Black


Plutonic production rose 8% for the December quarter to 20,983 ounces, a jump of 32% year-on-year.
Full-year guidance was 65,000-75,000oz, but the company's efforts over the 12 months saw a 23% boost in annual production to exceed expectations at 77,321oz.
The now-unhedged Superior ended the year with an extra C$3.3 million cash to $23.8 million.
CEO Chris Jordaan noted Superior had enjoyed six quarters of improving gold production and cash thanks to a steady improvement in mining rates and underground stope grades that were 3.2 grams per tonne for the full year, boosted by the inclusion of open pit ore.
Looking to 2022, the company has set guidance of 80,000-90,000oz at all-in sustaining costs of $1450-1600 an ounce.
It has warned that the first quarter will be the weakest due to a planned 14-day SAG mill shutdown, but expects that production rates should reach an annualised 100,000ozpa in the second half.
Jordaan noted continued underground improvements thanks to better modelling that is allowing larger and more productive stopes, and an increasing focus away from remnant ore with new areas expected to provide 30% of mill feed.
It will also benefit from the addition of open pit feed from Main Pit Deeps.
Main Pit Deeps was identified late last year as an option to bring in higher-grade ore early, without jeopardising the full Main Pit pushback project.
BMO Capital Markets analyst Brian Quast, who has a price target of $1.50 on Superior, expressed disappointment around the 2022 guidance, having expected the company to produce 100,000ozpa at $1150/oz this calendar year.
But he noted 2021 had been a strong, and with an improving liquidity position, supporting exploration success and development of new mining fronts, he has confidence in the new Superior team, and he reiterated his outperform rating.
Superior shares were last traded at 76c, valuing it at $93 million.
The stock has traded at 45-84c over the past year.