Stifel GMP has repeated a 'Buy' rating on Mongolia-focused gold producer Steppe Gold Limited (TSX:STGO, OTCQX:STPGF), saying it continues to be impressed with the ramp-up of its ATO mine and that the company is undervalued compared to peers.
On June 27 this year, the miner announced that gold output from the flagship mine was expected to hit 10,400 ounces in the second quarter, 6% higher than the broker's expected figure.
"Onsite reagent supply continues to increase towards the target of six months of inventory. With this robust stockpile of reagents, the active leaching footprint will be increased with the goal of producing 15koz in Q3 - significantly ahead of our expected 8.4koz," said Stifel analysts.
READ: Steppe Gold anticipates 2Q gold production of around 10,400 ounces from its ATO mine in Mongolia
"The company also announced that inaugural drilling at the UK property is now underway," added the broker.
"We continue to be impressed by the re-ramp of ATO and see significant potential for the stock to re-rate on production, drilling and execution of the Phase 2 Expansion."
The analysts also highlighted that Steppe trades at a P/NAV of a multiple of just 0.16, which was a "significant discount to the junior producer peer average of 0.41x".
Steppe Gold owns 100% of the advanced staged ATO gold project, where resource expansion drilling and a heap leach development is currently underway. The company also owns 80% of the Uudam Khundii (UK) gold project.
Contact the writer at giles@proactiveinvestors.com