Steppe Gold Ltd (TSX:STGO, OTCQX:STPGF) this week announced that it had entered into a definitive agreement to acquire Boroo Gold, bringing together two of Mongolia’s top gold producers.
The company, which owns the ATO Gold Mine and the Uudam Khundii project in Mongolia, expects to benefit from immediate cashflows, cost synergies, and boosted gold production, among other advantages.
CFO Jeremy South joined Proactive to discuss the acquisition and how it aligns with the company’s sharpened focus on Mongolia.
Proactive: We’ve talked in the past about the acquisition of Boroo Gold in Mongolia and you’ve now released the definitive agreement. First off, can you talk about what this acquisition entails?
JS: This is a pretty transformative deal for us. We’re acquiring Boroo Gold in Mongolia, adding significant production and cashflow to the current portfolio at Steppe Gold. It’ll bring in cashflow of over $100 million in 2025 and strong cash flow into 2024. And it gives us the optionality of being able to do more things in different ways and support the Phase 2 expansion at the ATO Gold Mine.
As far as being a gold producer, this puts you in a whole new category as the premier one in Mongolia now.
Steppe Gold and Boroo Gold are the two largest gold miners in Mongolia. Bringing us together creates a real national champion, a gold company of real scale. In 2026, we’ll be doing over 150,000 ounces of gold production on a pro forma basis and continuing this on into the following years. It gives us a really good runway and a much bigger platform to do other things and potentially grow our asset base in Mongolia.
You’ve just sent along the Tres Cruches oxide project [in Peru]. You’ve moved that out to concentrate just on Mongolia.
We’ve decided to really sharpen our focus in Mongolia. We were able to find actually the same counterparty with the Boroo Gold acquisition so it was a nice, clean deal to get cash for that asset and refocus on Mongolia.
This makes you a strong player, not only in Mongolia but on the gold scene in general.
Exactly. We go from being a small producer with a development asset to a significant producer with a development asset and the ability to add more assets onto it. That’s what investors are looking for: scale and cashflow, and we deliver that in spades. The important takeaway here is that we’re going into this in a strong cashflow generator position. That’s what the market is looking for with gold prices where they are, significantly higher above $2,350.
Quotes have been edited for clarity and style