Steppe Gold (STGO.T), a TSX-listed gold producer operating in Mongolia, is expanding its production capabilities at its flagship Altan Tsagaan Ovoo (ATO) gold mine. Located in Dornod province in eastern Mongolia, ATO covers approximately 5,492 hectares. Steppe has been producing at the project since 2020.
At the end of Q3 2023, the company reported a quarterly production of 7,920 gold ounces for revenues of $15.77 million USD. Site All in Sustaining Costs came to $856 per gold ounce sold with an average realized price of $1,933 per gold ounce.
Steppe’s committed expansion at ATO has the aim of producing over 100,000 ounces gold equivalent annually when phase 1 production transitions to phase 2 in 2025, increasing 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 equivalent.
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.
On top of the other two Mongolian projects, Uudam Khundii – one of the largest exploration packages in western Mongolia – and Mungu, Steppe has further diversified its portfolio with the prolific Tres Cruces Oxide Gold Project located in Peru. The company recently filed an updated preliminary economic assessment for its 100%-owned asset, reporting a net present value of $158 million with a 30.9% IRR for the 2.47 million gold ounce project.
At the end of January, Steppe announced its intention to carry out another strategic acquisition of Boroo Gold, a leading Mongolian gold producer with an average gold production of over 60,000 ounces yearly with an expected mine life which extends 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 has huge mining potential, with only 3.3% of the country’s territory under exploration licenses and 1.2% under mining licenses, contributing one fourth to GDP, attracting 83% of foreign direct investment, and comprising 94% of exports, with roughly 10% of mining licenses currently in operation.
Building a Mongolia’s leading gold producer and plans for further acquisitions, Steppe Gold has a great head-start as a major investment vehicle into precious metals and untapped resources in Mongolia.
Steppe has prepared the groundwork for listing on the Hong Kong Exchange, a move that would expose the company to an expansive market with a combined capitalization of $6 trillion that could further propel its exploration and production in Mongolia and abroad.