Stifel Financial Corp has increased its price target for Steppe Gold Limited (TSX:STGO, OTCQX:STPGF) to $3.50 from $1.90 and repeated a 'Buy' rating on the stock after the company released the feasibility study technical report for its Phase II sulphide expansion.
The Stifel analysts said they believe that the feasibility study has significantly de-risked the project and highlighted lower costs.
The analysts noted that after incorporating the recent details of the report in their model, “we now show the Phase 2 Sulphides project producing 107 thousand ounces of gold equivalent per year (64% gold) of payable metal for the first five years of mine life at a site-level all-in sustaining cost (AISC) of $759 per ounce gold equivalent from a new 6,000 tonnes per day floatation plant and associated open pit mine.”
READ: Steppe Gold gets $3.15 price target from Hannan & Partners as it initiates coverage on the Mongolia-focused miner
Over the estimated 13.5 year mine life, production averages 91 thousand ounces of gold equivalent per year at $858 per ounce, the Stifel analysts said.
“At our Stifel GMP price deck, this generates $65.5million per year in free cash flow (FCF) at the mine level over the first five years of mine life (starting in early 2024),” they added. "We are moving to a 5% discount rate with our overall NAV increasing 92% to $3.55/sh."
The study results from Steppe Gold includes diesel power, “but a grid power connection could reduce operating costs,” the analysts noted looking at the opportunities.
Steppe Gold is a precious metals exploration and development company with an aggressive growth strategy to build it into the premier precious metals company in Mongolia.
The company owns 100% of the advanced staged Altan Tsaagan Ovoo Gold Project where resource expansion drilling and a heap leach development are currently underway.
Contact Ritika at ritika@proactiveinvestors.com