Steppe Gold Ltd (TSX:STGO, OTCQX:STPGF) has reported positive financial results for the first quarter of 2023 and outlined its future outlook.
The company's revenue for the quarter amounted to $9,525,000 generated from the sale of 5,008 ounces of gold and 651 ounces of silver. The average realized prices per ounce were $1,899 and $19, respectively.
Steppe Gold produced 6,993 ounces of gold and 19,877 ounces of silver during the quarter, resulting in an operating income of $6,024,000 from mine operations before depreciation and depletion.
The company's consolidated group adjusted EBITDA, after stream payments, reached $2,141,000 for the quarter. Steppe Gold reported an all-in-sustaining cost (AISC) of $679 per ounce sold during the quarter.
Mining activity during the period involved the extraction of 87,362 tonnes of ore, with 195,196 tonnes stacked on the leach pad, carrying an average gold grade of 0.94 grams per ton (g/t) and an average silver grade of 5.81 g/t.
Commenting on the results, Steppe Gold management highlighted the focus on maximizing production and accelerating stacking rates throughout the remainder of 2023. The company aims to bring a new fixed crusher online in the third quarter. Additionally, Steppe Gold emphasized the strategic priority of securing project finance commitments for the Phase 2 Expansion at the ATO Gold Mine.
Regarding the operational performance, management noted that production levels exceeded targets in the first quarter despite planned low mining activity during the winter conditions. The recent relaxation of COVID-19 restrictions in China has improved parts of the China/Mongolia supply chain, alleviating some bottlenecks, although critical reagent supply remains restricted and alternative supply arrangements are currently supporting normal production levels.
As of March 31, 2023, Steppe Gold had cash on hand amounting to $1,339,000 with total bank and other debt (excluding convertible debentures) reaching $9,758,000. Its net debt stood at $8,419,000. In January 2023, the company secured a $5 million working capital loan, which is due for repayment later in the year.
Steppe Gold successfully completed a non-brokered private placement in the first quarter, with participation from management and 2176423 Ontario, a company beneficially owned by Eric Sprott. The private placement raised gross proceeds of C$12,100,000, which will be utilized to accelerate the Phase 2 Expansion, fund ongoing exploration, and support the planned dual listing on the Hong Kong Stock Exchange.
In addition, Steppe Gold announced the signing of an agreement to acquire all issued and outstanding common shares of Anacortes Mining Corp in an all-share transaction. The agreement, subject to regulatory approvals and shareholder consent, will result in Steppe Gold owning approximately 79% of the combined company, with Anacortes shareholders owning the remaining 21%.
The transaction is expected to be completed following necessary regulatory, stock exchange, and court approvals, with a shareholder meeting of Anacortes scheduled for June 19, 2023.
Furthermore, Steppe Gold announced plans to pursue a dual primary listing for its common shares on the Main Board of the Stock Exchange of Hong Kong Limited, which is anticipated to occur later in 2023.
Contact the author at jon.hopkins@proactiveinvestors.com