Steppe Gold – Expanding Production Potential In Mongolia

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Steppe Gold – Expanding Production Potential In Mongolia

Steppe Gold (STGO.T), a gold producer listed on the TSX and operating in Mongolia, is enhancing its production capacity at the flagship Altan Tsa

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Steppe Gold (STGO.T), a gold producer listed on the TSX and operating in Mongolia, is enhancing its production capacity at the flagship Altan Tsagaan Ovoo (ATO) gold mine. Situated in the Dornod province of eastern Mongolia, ATO spans approximately 5,492 hectares, with Steppe commencing production at the site in 2020.

As of the end of Q3 2023, the company reported a quarterly production of 7,920 gold ounces, generating revenues of $15.77 million USD. The site All-in Sustaining Costs came to $856 per gold ounce sold with an average realized price of $1,933 per gold ounce.

Steppe is actively pursuing expansion at ATO, aiming to achieve an annual production exceeding 100,000 ounces gold equivalent as phase 1 production transitions to phase 2 in 2025, thereby extending the total mine life to 14 years.

With only about 10% of the license at ATO having been explored, Steppe continues to drill under current reserves and is expanding brownfield exploration with the goal of adding to February 2021’s resource estimate of 2.45 million ounces of gold

Both undertakings will be powered by Steppe’s recently announced debt financing of $150 million provided by the Mongolian Trade and Development Bank. To date the gold producer has drawn less than $10 million from the facility and has intentions of drawing another $20-$30 million in the next 30-60 days to secure the purchase of the heavy equipment necessary for phase 2 expansion. ATO Gold mine is expected to generate $2.2 billion in total.

In addition to its two Mongolian projects, Uudam Khundii – one of the largest exploration packages in western Mongolia – and Mungu, Steppe has expanded its portfolio by acquiring the prolific Tres Cruces Oxide Gold Project situated in Peru. The company recently submitted an updated preliminary economic assessment for its wholly-owned asset, revealing a net present value of $158 million with a 30.9% Internal Rate of Return (IRR) for the 2.47 million gold ounce project.

In late January, Steppe unveiled plans for a strategic acquisition of Boroo Gold, a prominent Mongolian gold producer known for its annual gold production exceeding 60,000 ounces and anticipated mine life extending beyond 2030.

Upon completion of acquisition, Steppe Gold’s annual production is expected to increase to 90,000 oz, pro forma for 2024 and 2025. This proposed transaction would result in the creation of a leading gold producer in Mongolia with a near-term production target of 200,000 ounces annually, including the planned phase 2 production expansion at ATO.

Mongolia boasts immense mining potential, with only 3.3% of the country’s territory under exploration licenses and 1.2% under mining licenses. Mining contributes significantly to the GDP, attracting 83% of foreign direct investment and making up 94% of exports, with roughly 10% of mining licenses currently operational.

As Steppe Gold strives to become Mongolia’s premier gold producer and pursues further acquisitions, it holds a significant advantage as a key investment avenue in precious metals and untapped resources within Mongolia.

Steppe has laid the groundwork for a potential listing on the Hong Kong Exchange, a strategic move that would expose the company to a vast market with a combined capitalization of $6 trillion. This listing could provide substantial momentum for its exploration and production endeavors in Mongolia and beyond.

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