Steppe Gold Ltd (TSX:STGO, OTCQX:STPGF) has announced an updated life of mine (LOM) for its 100% owned ATO gold project in Mongolia, comprising a further 1.5 years at the Phase II fresh rock expansion for a 12-year aggregate mine life.
The Mongolia-focused gold miner said the results reinforce its current Phase 2 expansion plans with construction already underway and existing permitting and infrastructure in place, adding that it is making steady progress towards producing the first concentrates in the first quarter of 2025.
The LOM plan includes the ongoing oxide operations which have a further three years to run, for a total of 14 years of mine life, from January 1, 2023. It showcases ATO’s potential to recover 1.24 million ounces (oz) of gold equivalent (Au Eq) over a 12-year mine life, at 103,000 oz Au Eq per annum, through the Phase 2 expansion, the company added.
READ: Steppe Gold sees 180% year-over-year increase in gold production at ATO project in Mongolia
“Our ongoing success in oxide production solidifies our belief in the ATO Mine's expansion potential and strong economics, even under conservative metal prices," Steppe Gold president and CEO Bataa Tumur-Ochir said in a statement.
“To further enhance the Phase 2 Expansion, we are working on connecting to grid power, reducing construction and engineering costs, and continuing exploration to support future resources,” he added. “We are confident that the ATO Mine will provide significant value to all stakeholders, with an estimated total gross revenue of $2.2 billion over the next 14 years, including the remaining oxide phase, and operating cash flows after stream obligations of $768 million.”
Updated LOM highlights include:
- Increase in proven and probable gold mineral reserves from the 2021 mineral reserve and resources summary by 2.7 million tonnes, from 26.4 million to 29.1 million tonnes;
- The ATO project deposit contains mineral reserves totaling 29.1 million tonnes at 1.13 grams per tonne (g/t) gold (Au) and 12.43 g/t silver (Ag), containing 1.1 million ounces (oz) of gold and 11.7 million oz of silver;
- This derives a total of 1,320,000 oz Au Eq recovered, over oxide and fresh rock phases and a 14-year mine life;
- Fresh rock mine life is extended by 1.5 years to 12 years, extending open pit mining and milling operations to December 2036;
- The new pit model shows the fresh rock phase generating 1,237,000 oz Au Eq recovered over 12 years, at an average Au Eq oz of 103,000 oz per annum, before payability adjustments;
- The update of reserves and resources has also reinterpreted the transition zone with the transitional layer now thinner than previously modelled;
- Total gross revenue over the next 14 years, including the balance of the oxide phase, of $2.2 billion and operating cash flows after stream obligations, of $781 million, with first concentrate production from Phase 2 anticipated in 1Q 2025;
- It assumes gross revenue in the remaining oxide phase of $158 million ($1,900/oz gold price) from approximately 83,000 of recovered Au oz, expected to conclude in 2025;
- Average site AISC of $915/gold equivalent ounce, with solid plans to optimize, notably with grid power and potential renewable power options;
- Initial capital expenditure and operating cost assumptions are largely unchanged. Initial capex for the Phase 2 Expansion, before optimizations, is expected to be $128.5 million with a $12 million contingency. Recent price inflation has largely been offset by positive currency effects; and
- ATO gold project's after-tax net present value (NPV) is estimated at $242 million at a 5% discount rate using a long-term gold price of $1,700/oz gold ($1,900/oz in the oxide phase), $20/oz of silver, zinc price of $2,500/t and lead price of $1,970/t.
“This very exciting update supports our expectation that the ATO project will show expansion potential with solid revenues and competitive costs,” Steppe Gold executive chairman Matthew Wood said. “We believe we can improve on gold recovery overall and anticipate more positive results following the exciting high-grade base metal showings at ATO and further work at the Mungu deposit."
Steppe is one of Mongolia's main precious metals companies.
Contact the author at stephen.gunnion@proactiveinvestors.com