Company
TSE:STGO
Steppe Gold Ltd is Mongolia's premier precious metals company producing gold from the operational oxide zone of the ATO Gold Mine. The company has completed a feasibility study into expansion of the ATO Gold Mine to approximately 100,000 ounces of gold per annum from the development of underlying fresh rock ores.
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Analysts at Stifel said they are pleased to see the ramp-up at ATO Gold Mine going so smoothly and that “the rate of production is increasing faster than we had expected”
This compares to the output of 3,370 oz in April and 1,532 oz in March, the company said
Gold production in the three months ending March 31 was 2,385 ounces compared to the broker's modeled 1,532 ounces
The company reported revenue for the three months ending March 31, 2022, of $5.5 million, compared to $1.9 million for the same period in 2021
During the month of April, the firm reported gold production of approximately 3,350 ounces in two pours, compared to 1,532 ounces in March 2022
Analysts predict increased fuel prices spurred by the war in Ukraine and the pandemic will impact 1Q earnings for some of the biggest precious metals miners
Analysts at the brokerage noted that the oxide mine is well-positioned for production success and reserve growth, with early Phase 2 Sulphide expansion work well underway
"We are very pleased to announce these exciting drill results with high grade intercepts of zinc and lead supporting our view that the Phase 2 Expansion at ATO has much further to go,” the company’s president and CEO Bataa Tumur-Ochir said
“With an estimated 80,000 ounces of gold in inventory, ramp-up of production continues and we look forward to a very active year of production and strong cash flow, as well as expansion and exploration on both of our licenses," said preside
Operating income from mine operations, before depreciation and depletion for the year to December 31, 2021 was US$12.4M, while the group adjusted earnings before interest, tax, depreciation and amortization was US$4.9M
Hannam's analysts said: "We view the restart of production as a major catalyst for the stock, reducing the residual uncertainty over the funding of ATO’s Phase 2 sulphide expansion which will continue to progress over the coming months"
Analysts at the brokerage said the company has 34,000 ounces of unleached, crushed ore stacked on the pad waiting for solution and a run-of-mine (ROM) inventory of another 38,500oz
As of March 1 this year, the firm has 2.45 million (m) tonnes of ore stacked on the leach and run-of-mine (ROM) pads
Stifel's analysts said they are reducing the discount rate for the Phase 2 Sulphides to 5% from 7.5% as the publication of the study de-risks the project
The research firm wrote that Steppe is a “ground floor opportunity in a proven gold producer,” noting that the company is upsizing operations at its ATO mine in Mongolia
The company began producing gold at its flagship Altan Tsaagan Ovoo (ATO) mine in March 2020
The 2021 Gold-2 Loan is a special purpose covenant-light loan, with a three-year term at 9% interest and full prepayment rights without penalty
The company said the results reinforce its current Phase 2 expansion plans with construction already underway and existing permitting and infrastructure in place
During the third quarter mining and stacking on the heap leach phase at the ATO mine has continued with 1.7 million tonnes stacked on the leach pad and a further 0.6 million tonnes stacked on the ROM pad
As recently reported, the firm ceased leaching (but continued stacking) at ATO in early July this year due to issues surrounding cyanide supply
