Superior Gold Inc.

Thank you, Michelle. Good morning, everyone, and thank you for joining us to discuss Superior Gold’s second quarter 2021 results.

I hope you and your families are well and safe. I would like to start by acknowledging the contributions of our outgoing Interim CEO, Tamara Brown.

The value Tamara brought to the company over the past year is clearly evident in our latest results, and I want to thank her for stepping in, articulating our growth strategy and working with the team to start the turnaround at our operations. We will continue to build on this platform Tamara put in place to deliver our growth strategy.

As a reminder, please refer to Slide 2 of our presentation, which is posted on our website to review our cautionary language regarding forward-looking statements. In addition, please note that all amounts discussed are in U.S.

dollars unless noted otherwise. As you are aware, I’ve recently stepped into the President and CEO role.

For those of you don't know me, I have 30 years of international processing and mining experience. Most recently, I was with Newcrest Mining, Australia's largest gold miner, as Programme Director for transformation of the PNG operations and previously the General Manager of Lihir Gold Mine, one of the world's largest gold mines and Chief Performance Officer.

Prior to that, I was the CEO of International Ferro Metals Limited, an LSE listed integrated chrome mining and smelting company. I'm excited to be leading the Superior Gold team, working closely with the Board as we continue with the transformation at the Plutonic Gold Operations towards its full potential.

Together, we will be focused on achieving the company's strategic goals of sustainably growing our gold production from both underground and open pit operations, combined with the opportunity for belt consolidation in one of the world's most prolific gold mining camps located in the Yilgarn goldfields of WA. Joining me on today's call are Paul Olmsted, our CFO; and Keith Boyle, our COO.

As a reminder, we believe the key investment highlights for Superior Gold are that our operations are located in Western Australia, which is one of the top mining jurisdictions in the world according to the Fraser Institute. We own a world-class operating mine with significant established infrastructure.

We have a clear and concise optimization and expansion plan, which I will discuss in more detail in the next slide. We have a significant mineral resource base plus additional exploration upside given our very large and underexplored mineralized system.

And finally, one of the most compelling attributes is the re-rate opportunity we represent compared to our peers. First, we are looking to reestablish steady-state production from the underground mine and we are encouraged to see it return to a steady-state of improving positive cash flow in both the first and the second quarter of this year.

The [near mining] resource expansion drilling and mineral exploration currently underway, seeks to provide future mining fronts with stable cost effective feed to the mill. To supplement this underground feed, we are adding open pit production from a number of near-mill, past-producing open pit projects, including Plutonic East, which commenced on schedule during the second quarter, then Perch with optionalities of Salmon, Hermes and Hermes South.

The opportunity we view is currently underway will explore and have better opportunities to maximize the potential from these pits. The timeframe and CapEx to put these smaller pits into production is relatively short and relatively low.

And with the announcement of the Plutonic Main Pit push-back project at the end of 2020, we now have a potentially longer term steady supply of open pit feed. The third pillar of our growth strategy is recommissioning our second mill that is currently on care and maintenance.

New sources of feed might come from exploration in our existing properties or from several other sources along the Plutonic Marymia Gold Belt. This provides the opportunity to increase production at Plutonic to well above the current levels with the minimal capital expenditures because of the significant infrastructure that’s already in place.

Finally, there is a potential for a new discovery as we invest in exploration at Plutonic. We are certainly been very encouraged by our recent drilling results now that we have a third drill rig on the property dedicated to opening new mining fronts.

We are providing exploration update later in August, 2021. We continue to successfully operate through the COVID-19 pandemic and to adhere to the strict measures that we have put in place to mitigate this threat.

Today, we are pleased to report that we have had no incidence of infection of COVID-19 at either our operations or corporate offices for a sixth consecutive quarter. We are also putting a lot of effort into introducing a safety culture that is committed to a workplace free of accidents.

We continued to conduct regular safety workshops, as well as place an emphasis on the SLAM hazard identification cards and Felt Leadership program, all of which is having a positive impact, ensuring that our people know that they are the most important priority. Highlights of the second quarter 2021 include, firstly, the production of 19,356 ounces of gold with sales of 19,099 ounces of gold at a realized price of $1,801 per ounce.

Total cash costs were $1,412 per ounce sold and all-in sustaining costs were $1,519 per ounce sold. Our U.S.

dollar denominated all-in sustaining costs continued to be impacted by a strong Australian U.S. dollar exchange rate that is currently trading near five-year highs.

During the quarter, we completed the early full repayment of our Auramet gold loan, which will provide us to $10 million annualized conditional cash flow beginning in the third quarter of 2021. For a second straight quarter, we generated significant cash flow from operations and exited the quarter with a robust cash position of $17.4 million.

Operationally, we also improved our mining stope grade by 35% relative to the second quarter in 2020. Our metal grade increased for the fourth consecutive quarter and metal recoveries improved from 86% to 88%.

An improved understanding of the geology and mineralization at Plutonic has led to establishing two new mining fronts as demonstrated by the exciting new drill results at the Baltic Gap Mining Front and the Western Mining Front. I’ll now turn to our Chief Operating Officer, Keith Boyle, to discuss our operating results for the quarter.

Over to you, Keith.

Thanks, Chris. As we mentioned, the Plutonic gold operations produced 19,356 ounces of gold in the second quarter as compared to 15,177 ounces of gold in the same period in 2020.

The increase is largely as a result of increase in the contribution of higher grade stope material that reduced the proportion of lower grade legacy stockpiles being milled. Total material milled during the second quarter decreased by 9% to 359,000 tons compared to the same period in 2020, partially as a result of processing fewer tones from low grade legacy stockpiles in the second quarter of 2021, as the legacy stockpile processed included oxide ore materials, which required the mill to operate at a slightly reduced throughput rate.

Recoveries were 88% for the second quarter representing a continued improvement as a result of the higher head grades due to the contribution of Plutonic East open pit ore. The highlight of the quarter was the underground stope grade mined at 3.26 grams per ton, which represents an increase of 35% over the second quarter of 2020.

Operationally, we continue to focus on improving productivities, which has benefited from the arrival of new mobile equipment aimed at improving equipment availability and lowering maintenance costs. In addition, in an enhanced understanding of the geology and mineralization at Plutonic has improved our ability to predict the areas of higher grade mineralization at the underground operation.

We’ve seen a steady improvement in the results following the operational improvements we’ve implemented at Plutonic as illustrated in Slide 9. The underground mine stope grade of 3.3 in the second quarter represents an increase of 35% over the second quarter of 2020.

As a result, the average head grade has increased by 34% since the second quarter of 2020 and overall quarterly production has increased by 28% highlighting the importance of mined stope grade to our overall profitability at Plutonic. I’ll now turn the call over to Paul Olmsted, our Chief Financial Officer to discuss the financial results for the quarter.

Thanks, Keith. During the second quarter, revenue totaled $34.4 million from the sales of 19,099 ounces of gold, an increase of $9.4 million from the $25 million from the sale of 15,536 ounces of gold in the second quarter of 2020.

Gold revenues were higher as a result of 3,563 more ounce is being sold and an increase in the realized gold price to $1,801 per ounce from $1,608 per ounce. Costs of sales were $29.5 million for the second quarter of 2021, an increase of $5.4 million from $24.2 million for the second quarter of 2020.

This was due to the stronger Australian dollar, the impact of which resulted in a $4.3 million increase despite an Australian dollar decrease in processing depreciation and site services categories. In addition, mining costs were higher by $1.7 million with the addition of the Plutonic East open pit mining.

Adjusted net income for the second quarter of 2021 amounted to $1.7 million or $0.01 per share compared to adjusted net loss of $0.6 million or $0.01 per share in the second quarter of 2020, and this is primarily due to the higher operating earnings in the current period. During the second quarter, cash from operating activities before working capital changes was $2.6 million, a $2 million increase over cash from operating activities of $0.6 million for the second quarter of 2020.

The increase in cash generated from operating activities was predominantly a result of the stronger operating earnings in the second quarter of 2021 in comparison to the second quarter of 2020. The chart on the right highlights that in the second quarter cash flow from operations before working capital changes and before the repayment of the gold loan increased significantly by $2.3 million compared to the same period in 2020.

As at quarter end, the company had $17.4 million in cash and cash equivalents. We also exited the second quarter with zero term debt after early full repayment of the Auramet gold loan.

I’ll now turn the call back to Chris to continue with the rest of the presentation.

Thank you, Paul. Our production guidance for 2021 remains unchanged as we continue to guide towards production of between 65,000 and 75,000 ounces of gold for the full-year 2021.

As you are all aware, we are currently focused on unlocking the value in the underground through production growth, margin optimization and systematic exploration. First, we are focused on optimizing our grade from the underground.

Stope grade continues to be the most important factor in determining our profitability. As such, we are fully engaged and driving towards an average stope grade of better than 3 grams per ton.

We are pleased to report that we have further advanced our geological understanding of Plutonic orebody, including those Northwest trending faults that control the location and concentration of higher-grade gold mineralization. This has led to a number of strategically significant exploration results as well as the identification of higher grade stopes on the operational front.

In mining operations, we have revitalized our underground fleet with the addition of two new trucks and two loaders. This has already improved our equipment availability and reduced our maintenance costs.

We are also focused on minimizing equipment movement underground with more strategic mine planning. At the mill, which operates very well, the recommissioning of the gravity circuit has had a positive impact on our recoveries.

We are also completing an opportunity to review, whereby we are analyzing the full potential of the operations and crafting a strategy to work towards it. Finally, the addition of the third underground drill rigs that is dedicated to expanding into new mining concepts has resulted in some very promising results recently, which I will discuss in more detail shortly.

As I mentioned, we are working on adding several smaller open pits to propel production to approximately 100,000 ounces per year. From past-producing pits, including Plutonic East, Perch, Salmon on the Plutonic Mine property and Hermes, Hermes South that’s located to the Southwest.

During the second quarter, we commenced open pit mining at Plutonic East on schedule. We plan to utilize the production from these open pits plus longer term the Main Pit push-back, along with operational improvements from the underground to increase production and return to Plutonic Gold Operations to a state of significant free cash flow generation.

Now moving to the exploration front. We recently announced promising gold results from our new underground diamond drill program, which commenced in December, 2020.

Slide 14 is a reminder that there are significant intercepts in close proximity to the existing infrastructure as well as ore grade intercepts located one kilometer outside of the mineralized mafic. It should be clear that the limits of the mineralization have yet to be found and continued investment into exploration of Plutonic is warranted.

In the near-term, our focus in the underground is on exploring and developing into new mining fronts, so there is a lesser reliance on remnant mining. We believe that the two new mining fronts being the Western Mining and the Baltic Gap Front will be key in improving the profitability of this operation in the near-term.

On June 23, we provided an exploration update in the second quarter which will result from the Baltic Gap. The results were highlighted by drill hole UDD24342, which intersected 14.8 grams per ton gold over 13.4 meters.

This new mining front now extends approximately 350 meters by 200 meters outside of the current Mineral Resource estimate and remaining open along strike and at depth. As a reminder, the new Baltic Gap Mining Front is also directly adjacent to existing underground infrastructure, thus requiring minimal capital to develop the area.

The extent of existing mineral resources are key components of our current strategy to expand into new mining fronts and improve our mining grades and productivity. We have a number of upcoming catalysts worth noting.

Going forward, we expect to provide more regular underground exploration update now that we have the third drill rig operating and dedicated to exploration. We continue seeing continuing optimization and final engineering at Perch.

We also expect to be commencing and announcing result of heritage surveys, which will hopefully have some positive impacts on the Main Pit push-back project and make clear the timing of the Hermes South project. And as of the next 12 months, we have a healthy pipeline of development and exploration catalyst to look forward to.

In closing, I would like to highlight – Slide 18, is a quick summary of the analyst currently covering the stock, our key shareholders and capital structure. We were very encouraged by the support of some significant long-term gold funds.

And we know that analysts see a significant upside to our current share price. We also maintain a tight share structure with just 122 million shares outstanding.

In closing, I would like to highlight the significant re-rate opportunity that exists with Superior Gold as presented on the slide. By continuing to deliver on our commitments, we believe the company will revalue with a significant upside that exists between our current rating and that of the current consensus estimates for us.

We are focused on repositioning Plutonic for the long-term success and unlocking shareholder value. And we encourage you to take another look at this opportunity.

With that, we conclude the presentation portion of the call. Operator, you can now open the lines for questions.

Yes. Actually from PI Financial here.

First question on your – was related to cash costs here. So I'm looking at gold sales 2,000 ounces higher over Q1.

Your cash costs were roughly about $100 an ounce higher. So could you just speak to the potential unit costs that are maybe impacting those metrics?

Paul, can I hand that over to you, if you can comment on the cost please?

Sure. Just on the cost, a lot of the increases with the – the increase in the open pit mining costs with the addition of Plutonic East for the quarter.

As we get further in – later in the year with the potential of addition of Perch, we certainly see some benefits with grade and reduced cost with respect to that addition.

Fair enough. But I guess on a per ton basis, I would imagine that the open pit mining activity was substantially lower as a contribution factor to the overall was kind of tons mined and milled.

So could you give us some sort of ratio or breakdown of the open pit tons to the underground tons, and maybe where you see that shifting over time as the open pit ramps up?

Sure. Just in terms of the split, I mean, I don't have the number off hand because we are ramping up Plutonic East.

I do think that our underground costs remain pretty well consistent with what they've been in the past. The Australian dollar certainly has impacted on our costs.

As you can see, we were looking at around a $200 increase in cost with relative to the prior year, just on FX impacts in the recent since the end of the quarter or certainly the Australian dollar has come off somewhat. So we do expect to see some benefit of that for the remainder of the year if it continues where it is.

Okay. On the right of open pit to underground, we are currently running at about 55% underground ratio to open pit, we expect that to remain the same in the near-term.

But with Perch coming on stream, we expect better results come through.

Okay. Fair enough.

That's good clarity there. Then just on the exploration side of things, obviously some good results coming from Indiana and Western Mining Front and so forth.

Where are you at with sort of pushing that a little bit more aggressively and working that into the mine plan, albeit, maybe tighter drill spacing and getting that sort of resource bumped up into reserves, what sort of timeframe are we expecting here?

Well, so the announcement that we made on the Baltic Gap results, a lot of it was infill drilling in order to have the indicated resources. So the deals are in fact right now compiling those resources, which take a few months to get that done.

We are doing some preliminary mine planning. So it'll be part of our resource, reserve statement which we would expect early next year.

Okay. Great.

That's it for me. Thank you.

I think it's also worth noting that in addition to that, we are also extending our exploration activities on surface as well with specific targets that we've identified.

Yes. Hi guys.

Just to follow-on the previous question there. Could you actually give me what the unit cost per ton was underground and how that compares to last quarter or previous quarters and where that's headed?

And I recognized, Paul, you're talking about the FX factor. So just maybe give it to me in Australian dollars so that – I at least get a kind of a benchmark from where you're moving to?

Paul, do you want to answer that question?

Yes. I’m just looking for the information right now.

Generally, we run at around AU$100 ton on mining costs and those have been relatively consistent from quarter-to-quarter at the underground. So I mean, we don't see any significant changes from that at this point.

Keith, do you have anything more on unit cost basis for that?

No, the underground runs between 90 and a 100, Pierre.

Okay. Thanks, Keith.

But Keith and I guess, Chris as well, is there a room for improvement there or are you – with the changes that have been brought about over the last year or so, which is where we should expect it to stay?

So at a higher level, Pierre, right now, probably for the rest of the year, it'll stay about the same. The new mining fronts will give us the opportunity to get more efficient as opposed to the remnant mining.

And so we see that opportunity, in particular, for example, the development costs helping us in that respect because we do a lot of bypasses right now to do the remnants [indiscernible] they had left. And so on a ton per meter or ounce per meter basis, we see an improvement just in developing new mining.

And I think [indiscernible] with the technical work that we are currently doing on the tighter positioning of the orebody, and we are seeing some promising results, they will put us in a position to better plan and come forward with more economical stuffs henceforth. So it's a slow process, but we’re already seeing some of the benefits flowing through.

Okay. So one last thing, when it comes to the new areas of Baltic Gap, maybe Keith, could you elaborate a bit on when that could come into the mine plan because presumably that would be a significant contributor in terms of productivity and cost and just margins in general?

So maybe without giving you a date, from now to the end of the year, Pierre, will be a basic, while we've started getting the infrastructure ready to start development and it's fairly close. So I would say within a few months.

Great. Okay.

So it'll be – I guess it'll be a real factor in 2022. That's what we should aim for.

That's exactly right. We're looking at a couple of those areas, and as Chris said, we're getting a better understanding of the gold distribution.

And so it's allowing us to plan longer term and we're finding that – by doing that, we're able to get these areas set up and developed efficiently.

Great. Okay.

Thanks Keith.

Thank you very much. Since there are no further questions, I would like to thank everyone for joining us today.

We are extremely pleased with the robust second quarter results, that shows the company has returned to the state of significant cash flow generation. We also continued to advance the strategic projects necessary to reposition Plutonic for sustainable longer term success.

This includes fully optimizing the underground operation and incorporating new sources of open pit feed, as I said before to increase our production levels while further advancing our understanding of the extensions of the mineralization at Plutonic. We expect that these improvements will draw the continued improvement in our financial performance over the course of 2021 and beyond.

Thank you, guys for joining on the call today. Have a great day.