Steppe Gold Limited (TSX:STGO, OTCQX:STPGF) is positioned favourably for the near term, having achieved multiple major milestones across production, development and exploration initiatives at its flagship Altan Tsagaan Ovoo (ATO) mine in Mongolia, say analysts at Couloir Capital, who have reiterated their ‘Buy’ rating on the company.
In a note, the analysts wrote that Steppe Gold's current valuation failed to capture its growth potential and raised their valuation of the company to C$2.22 per share from C$2.02 in their previous update.
On Monday afternoon, Steppe Gold was trading at about C$1.30 per share.
READ: Steppe Gold says gold production in Mongolia continues to increase in May with roughly 3,800 ounces of output
The analysts wrote that the company had largely dealt with issues around reagent stock and weather conditions that had plagued production through 2021 and going into 2022, with production increasing significantly at the ATO mine.
The company is now looking to scale up to the forecasted nameplate capacity of up to 60,000 ounces of gold equivalent per annum, with the Phase II expansion at the mine expected to raise output to north of 100,000 ounces of gold equivalent per annum.
“Against an initial CAPEX of $128 million, the recent project FS highlights a post-tax NPV at 5% of $232 million, suggesting robust project economics,” analysts wrote.
They also noted that Steppe Gold had demonstrated robust access to capital, having secured debt financing for project development that lowers equity dilution risk.
Steppe Gold is a precious metals exploration and development company with an aggressive growth strategy to build itself into the premier precious metals company in Mongolia.
Contact Emily at emily.jarvie@proactiveinvestors.com
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