Superior Gold Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Superior Gold's fourth quarter and full year 2021 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then two. If you have any difficulties during the conference, please press star, then zero for operator assistance at any time. As a reminder, this conference call is being broadcast live on the internet and recorded. I would now like to turn the conference over to Chris Jordan, President and Chief Executive Officer. Please go ahead, Mr. Jordan.

Thank you, Anas. Good morning, everyone, and thank you for joining us to discuss Imperial Gold's fourth quarter and year-end 2021 results. As a reminder, please refer to slide two of our presentation, which is posted on our website to view our cautionary language regarding forward-looking statements. In addition, please note that all amounts discussed are in US dollars unless otherwise noted. Jumping to the next slide, joining me today on the call is Paul Olmsted, our CFO, Russell Cole, our VP Operations, and Mike McAllister, our VP Investor Relations. Just going through a few investment highlights. Firstly, Plutonic and Superior Gold is a world-class operating mine with established infrastructure that includes significant latent milling capacity. The business has a clear and concise optimization and expansion plan, and I will lead to that a little bit later in the presentation, and is endowed with a significant mineral resource base with demonstrated exploration upside. Finally, one of the most compelling attributes is the re-rate opportunity we represent compared to our peers. In order to achieve a re-rate, our growth strategy targets to deliver on three goals. The first one is to deliver a safe, stable, and predictable operation, producing between 70,000 and 85,000 ounces per annum, which has now been delivered in our 2021 results. An operation of scale that reduced all in-sustaining costs by increasing production to circa 100,000 ounces per annum with the current 1.8 million tons per annum operating processing plant, and then towards 150,000 ounces per annum by restarting the currently shut down 1.2 million tons per annum milling circuit. This is expected to be achieved by increasing oil production from Superior Gold's underground open pit mines augmented by potential external sources as well. Lastly, we will continue to invest smartly on exploration of known high potential targets to expand the resource and reserve as well as our life of mine. I will explain in more detail how we plan to deliver these goals. Superior Gold's got a very well-defined growth strategy. And as I said before, we're targeting to deliver on three goals. Firstly, the goal is targeted to put in place a strong base for further growth, therefore delivering a safe, stable, and predictable operation, as I said, between 70 and 85,000 ounces. In this first phase, we started working to reestablish steady-state production from the underground mine, and are encouraged to see it return to a state of improving positive cash flow from 2021. In addition, the near-mine resource extension drilling and mineral exploration that started last year has, as predicted, provided future mining fronts for stable, cost-effective feed to the 1.8 million tonnes per annum mill. The second goal is targeted to deliver an operation with scale edging towards 150,000 ounces at full tilt at reduced cost and improved cash flow while strengthening the balance sheet. Goal two is planned to be achieved in two phases. The first phase is safe to see production increasing towards 100,000 ounces per annum by supplementing underground feed with open-pit production from a number of near-mill, past-producing open-pit projects, including Plutonic East, which had commenced on schedule in the second quarter of 2021, moving on to Perch in the fourth quarter of 2021, as well as now Main Pit Deeps in the second quarter of 2022. In addition, we have optionality into Hermes and Hermes South in the short term. The next phase is planned to increase towards 150,000 ounces per annum. Here we plan to recommission our second mill that is currently on care and maintenance. New sources or feed may come from exploration on our existing properties and or from several other sources along the platonic Miramaya Gold Belt. The third goal consists of delivering on the exploration of known high potential targeted areas. There is the potential for a new discovery as we invest in exploration at Platonic. We have certainly been very encouraged by our recent drilling results, which includes a third drill rig on the property dedicated to opening new mining fronts. And one may expect regular updates on exploration as well as actively moving forward with the surface drilling strategy, specifically now in 2022. It's important at this juncture to share how we are tracking to deliver on this strategy. Firstly, Superior Gold has delivered the first gold. In 2021, gold production exceeded our upper level guidance at 77,000 ounces delivered without any loss of productivity to COVID. In fact, we have had no COVID cases on site since the pandemic started. The underground production increased over the year and Q4 underground mining rate of circa 900,000 tons per annum was achieved. We now move on to goal two in 2022. The first phase will target to increase the quality of open pit ore by executing on an early entry opportunity in the main pit, We call that mine pit deeps. That will happen once purchase complete in the second quarter of 2022. This will see open pit ore grade increase towards 2.5 grams per tonne from circa 0.7 grams per tonne. The underground mine will expand its operations into new areas, providing up to 30% of total ore from underground from new areas. The underground is scheduled to deliver 900,000 tonnes in 2022, That's up from 835,000 ounces delivered in 2021 at an exit rate of 1 million tonnes per annum in the fourth quarter of 2022. The operational plan for 2022 is therefore designed to edge towards delivering the first phase in delivering operations of scale. We expect to announce the updated resource and reserve as well as the life of mine late in the first quarter, early second quarter of 2022, which will form the basis on which the next phases are expected to be delivered. Moving on to safety of our people and just reaffirming that is the top priority of our business. Above everything, the health and safety of our people remains our top priority. We continue to successfully operate through the COVID-19 pandemic and adhere to the strict measures that we put in place to mitigate this threat. In order to comply with recent legislation, all employees and contractors are expected to be fully vaccinated by February 1. We are also putting a lot of effort into introducing a safety culture that's committed to a workplace free of incidents. The People, Safety and Risk Transformation Program commenced in October and will focus on safety leadership, critical control management, i.e. on-the-job safety, process safety and material risks. Now moving on to our fourth quarter highlights. These highlights include production of 20,983 ounces of gold in Q4 with sales of 21,143 ounces of gold at a realized price of $1,786 per ounce. The total cash costs were $1,290 per ounce sold and the all-in sustaining costs were $1,416 per ounce sold. That's down 16 and 18% respectively on the fourth quarter of 2020, which is testament to the improved efficiencies and related cost benefits being implemented. For a fourth straight quarter, we generated significant cash flow from our operations of $8.5 million and exited the quarter with a robust cash position of $23.8 million. Operationally, we continue to achieve our targeted stoke grade of 3 grams per ton with our full year 2021 stoke grade at 3.2 grams per ton. This is an improvement of 10% relative to the full year of 2020. Our mill grade for the fourth quarter in 2021 increased by 19.9% over the comparable period in 2020. For the full year 2021, our mill grade increased by 13% over 2020, reflecting the impact of both higher underground grades and replacing low-grade legacy stockpile with high-grade open pit feed. The higher grade also has led to improved recoveries in 2021, with annual recoveries of 83% versus 87% for the same period in 2020. An improved understanding of the geology and mineralization of the tonic has led to establishing two new mining fronts, as demonstrated by the exciting new draw results at the Baltic Gap and Baltic Deep's mining front, and at the Western Mining Front, as well as Indian Access. All of these are in close proximity to existing development and infrastructure. Moving on to the next slide. As we mentioned, the plutonic gold operations produced 20,983 ounces of gold in the fourth quarter as compared to 15,838 ounces of gold in the same period in 2020. The increase is largely a result of the increase of contribution of high-grade stoke material that reduced the proportion of lower-grade legacy stockpiles being milled. Throughput rates were increased as there was an increase in availability of high-grade surface material for milling from the platonic east and perch open pits. In addition, an enhanced understanding of the geology and mineralization at platonic has improved our ability to predict the spatial positioning of the ore more accurately, allowing for better, more cost-effective stove design, scheduling, and planning. Moving on. We've seen a steady improvement in results following the operational improvements we've implemented at Platonic. Over quarterly production, overall quarterly production has increased by 38% from a low in the second quarter of 2020, highlighting the importance of targeting higher mine stub grades and its impact on our overall cash generation ability at Platonic. In addition, our net cash position has improved by $6.5 million in the fourth quarter to $23.8 million. a significant improvement from the end of the fourth quarter in 2020, reflecting improved operating performance and the repayment in full of our gold loan at the end of the second quarter in 2021. I'm now going to hand over to Paul Olmsted, our Chief Financial Officer, to discuss our financial results for the quarter.

Thanks, Chris. During the fourth quarter, Revenue totaled $37.8 million from the sale of 21,143 ounces of gold, an increase of $10.4 million from $27.4 million from the sale of 15,855 ounces of gold in the fourth quarter of 2020. Gold revenues were higher as a result of the 5,288 more ounces being sold and a marginal increase in the realized gold price to $1,000. 1,786 from 1,726 per ounce. Cost of sales were 29.4 million for the fourth quarter of 2021, an increase of 2.3 million from 27.1 million for the fourth quarter of 2020. This increase was due to the higher mining costs from the addition of 1.7 million of surface mining costs from the mining of Plutonic East and the perch open pits. which began in the second quarter of 2021, and that was partially offset by a reallocation of $1.2 million of camp and flight costs from the mining category into site services category to allow more effective site reporting. Also, due to the variance in the change in the inventory category, this change in inventory of $1.2 million in the three months ended December 1st 31, 2020, reflected decreases in stockpile inventory from the plutonic east and perch open pits, and an increase in the golden circuit inventory with the higher throughput for the quarter. Adjusted net income for the fourth quarter of 2021 amounted to $3.9 million, or $0.03 per share, compared to an adjusted net loss of $749,000, or $0.01 per share in the fourth quarter of 2020. and that was primarily due to higher operating earnings in the current period. During the fourth quarter, cash from operating activities before working capital changes was $8.3 million, a $10.2 million increase over cash from operating activities for the fourth quarter of 2020. The increase in cash generated from operating activities was predominantly a result of stronger operating earnings in the fourth quarter in comparison to the fourth quarter of 2020 and as well as the repayment of the gold loan in the second quarter of 2021. As you can see on the chart on the right, the highlights that in the third, fourth quarter, cash from operations before working capital changes and before the repayment of the gold loan increased significantly by $16.3 million compared to the same period in 2020. As that quarter end, as Chris mentioned, we had cash of $23.8 million at the end of the year. Of particular note is the fact that the gold loan was fully repaid at the end of the second quarter of 2021, and the company currently has zero term debt. As a result of the repayment of the gold loan and improved performance year-to-date, our working capital position has increased to $10.4 million over the December 2020 year-end position, a significant improvement. I will now turn the call back to Chris to continue with the rest of the presentation.