SIGNIFICANTLY INCREASING PROJECTED CASH FLOW
(In U.S. Dollars unless otherwise stated)
TORONTO, November 30, 2020 - Superior Gold Inc. ("Superior Gold" or the "Company") (TSXV: SGI) is pleased to announce that it has provided the required notice under its asset purchase agreement with Northern Star Resources Limited ("Northern Star") to repurchase the 2% net smelter return royalty (the "Northern Star Royalty") on future gold recovered from the Plutonic Gold Operations for $4.6 million (AUD$6.5 million). The Northern Star Royalty has a value of $7.1 million (AUD$10 million)1 and its repurchase is expected to improve the Company's projected cash flow by at least $2 million2 over the next twelve months.
Tamara Brown, Interim CEO of Superior Gold stated: "We are very pleased to be repurchasing the Northern Star Royalty, an immediately accretive transaction that significantly improves the projected cash flow from Plutonic over the next few years. We see the removal of this royalty as an important value enhancement for Superior Gold shareholders as a 2% royalty of this nature is customarily valued at a range of 10-20 times cash flow."
About Superior Gold
Superior Gold is a Canadian based gold producer that owns 100% of the Plutonic Gold operations located in Western Australia. The Plutonic Gold operations include the Plutonic underground gold mine and central mill, the Hermes open pit projects and an interest in the Bryah Basin joint venture. Superior Gold is focused on expanding production at the Plutonic Gold operations and building an intermediate gold producer with superior returns for shareholders.
For further information, please contact:
Superior Gold Inc.
Brian Szeto, Vice President, Corporate Development
Kate Stark, Director of Investor Relations
This news release contains "forward-looking information" within the meaning of applicable securities laws that is intended to be covered by the safe harbours created by those laws. "Forward-looking information" includes statements that use forward-looking terminology such as "may", "will", "expect", "anticipate", "believe", "continue", "potential" or the negative thereof or other variations thereof or comparable terminology. The forward-looking information contained herein includes, without limitation, information related to the timing and the completion of the Offering. Forward-looking information also includes information related to the Company's previously announced strategic review process, the potential outcome of such process and the intended maximization of shareholder value that the Company believes may result from such process. By identifying such information in this manner, the Company is alerting the reader that such information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information.
Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management at the date the statements are made. Furthermore, such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of the Company to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking information. Readers are encouraged to refer to the Annual Information Form of the Company for a discussion of other risks including outbreaks or threats of outbreaks of viruses, other infectious diseases or other similar health threats, such as the novel coronavirus outbreak, which could have a material adverse effect on the Company by causing operational and supply chain delays and disruptions, labour shortages, shutdowns, the inability to sell gold, capital markets volatility or other unknown but potentially significant impacts. The Company cannot accurately predict what effects these conditions will have on the Plutonic Gold Operations or the financial results of the Company, including uncertainties relating to travel restrictions to the Plutonic Gold Operations or otherwise and business closures that have been or may be imposed by governments. If an outbreak or threat of an outbreak of a virus or other infectious disease or other public health emergency occurs, it could have a material adverse effect on the Company's business, financial condition and results of operations.
The Company cautions that there can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, investors should not place undue reliance on forward-looking information as no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, and if any of them do so, what benefits the Company will derive therefrom. Except as required by law, the Company does not assume any obligation to release publicly any revisions to forward-looking information contained in this news release to reflect events or circumstances after the date hereof.
Neither the TSX Venture Exchange not its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.
1 As disclosed in the Company's Financial Statements. As part of the Plutonic Gold Operations acquisition, the Company agreed to pay Northern Star a 2% net smelter return royalty on future gold recovered in excess of a cumulative 300,000 ounces. The Northern Star Royalty terminates on the earlier of: (i) the date that a cumulative AUD$10 million is paid to Northern Star under the royalty, or (ii) gold in excess of a cumulative 600,000 ounces being produced. The Company maintains the right to purchase the Northern Star Royalty from Northern Star following the date that the first royalty payment is made to Northern Star. In July 2020, the Company reached the 300,000 ounce trigger and made the first royalty payment to Northern Star on October 29, 2020. The purchase price for the royalty is AUD$6.5 million less the amount of the first royalty payment made to Northern Star, due 15 business days after notification of repurchase.
2 Based on the Company's 2020 public guidance production estimate and spot gold prices.