From Steppe To Summit: The Ascendancy of Steppe Gold (TSX:STGO) in Mongolia’s Mining Scene

What if we told you that Mongolia, a country known for its breathtaking landscapes and nomadic traditions, also harbours immense gold resources waiting to be unearthed? This article takes you on an exploration through Mongolia's rugged terrain to discover the buried riches within its soil. Join us as we explore the dynamic realm of Mongolia's gold reserves, revealing the potent economic pulse beating beneath its steppe.

‍Mongolia Is Highly Focused on Mineral Explorations

During the past three decades, Mongolia has shifted from a centrally planned economy to a market-oriented one. This transformation has seen the mining sector emerge as a substantial catalyst for the nation's economic growth and prosperity. This sector now contributes to 80% of Mongolia's exports and attracts over 70% of foreign investment into the country. Notably, artisanal and small-scale gold mining (ASGM) is prevalent across various provinces in Mongolia, providing livelihoods for approximately 40,000 to 60,000 individuals. 

The country also hosts one of the largest worldwide mines named Oyu Tolgoi, held by the government of Mongolia (34%), and Rio Tinto (66%). The Oyu Tolgoi mining project is the largest financial undertaking in Mongolia's history and is expected, upon completion, to produce 450,000 tonnes (500,000 short tons) of copper annually. 

Several famous companies are exploring the country, hoping to find the next great discovery. 

• Erdene Resource: a Canadian-based exploration and development company with significant gold projects in Mongolia, including the Bayan Khundii and Altan Nar gold projects. 
• Xanadu Mines: an Australian exploration company with projects including the Kharmagtai copper-gold project and the Red Mountain gold project. 
• Altan Rio Minerals Limited: an exploration company that has gold and copper exploration projects in Mongolia. One of its significant projects is the Chandman-Yol Gold Project.
• Aspire Mining Limited: the company has exploration licenses for gold and other minerals in Mongolia. They are known for their Ovoot Coking Coal Project.
• Steppe Gold Limited: Steppe Gold is a Mongolia-focused gold company that owns the ATO gold project located in Dornod province and also holds a large exploration license in the country's Khundii Gold District. The ATO project has been producing gold since 2020. 

At First Phase, we’re keeping our eyes closely on Steppe Gold, arguably the leading gold producer in the region. When mining companies are in the production stage, that means one thing that’s a great sign for investors, and that’s positive revenue.

Introducing Steppe Gold - Mongolia’s premier precious metals company.

Steppe Gold (TSX:STGO) stands as a premier player in Mongolia's precious metals industry, specializing in the exploration and extraction of both gold and silver. Backed by an impressive history of success and a highly skilled team, the company is unwavering in its dedication to providing exceptional returns to its valued shareholders, achieved through the operation of cost-efficient, enduring assets. Currently, Steppe Gold is on course to yield more than 60,000 ounces of gold in 2022 and 2023, courtesy of its operational ATO Gold Mine's oxide zone, further solidifying its reputation as a leading force in the sector. 

The ATO Gold Mine, A Driving Force for Steppe Gold

The ATO Gold Mine is a monumental, multi-phase endeavour spanning 5,492 hectares in the heart of Mongolia's Dornod region. It boasts a treasure trove of mineral riches, with reserves totalling a remarkable 29.1 million tonnes, containing 1.13 grams per tonne of gold and 12.42 grams per tonne of silver. With a staggering 1.7 million ounces of gold equivalent in reserves and an ambitious plan to recover 1.32 million ounces over the next 14 years, including from the oxide zone, the ATO Gold Mine is on the cusp of a momentous production journey. 

Phase I of the ATO Gold Mine kicked off in 2018, with the construction of a state-of-the-art plant in 2019, and full-scale production in 2020. To date, it has yielded a remarkable 100,166 ounces of gold and 151,000 ounces of silver. The mine continues to push boundaries with ongoing exploration programs that are laser-focused on unlocking the full potential of the oxide resources. 

“ATO gold mine is estimated to generate 1.72 billion dollars in revenue and over 584 million dollars in earnings before taxes with a CAPEX of $128m, a rapid payback of capital in 3 years after taxes.”

Now, as we look ahead to Phase II, the ATO Gold Mine has secured an impressive $150 million in funding, paving the way for commissioning and production, which is expected to commence by the fourth quarter of 2025. This phase marks a pivotal moment as we finalize the turnkey EPC contract and initiate the procurement of long lead items in November. Over the course of 12 years, Phase II is poised to recover a staggering 1.23 million ounces of gold equivalent, with an annual production target exceeding 100,000 ounces of gold equivalent. This will translate into a substantial revenue of $2.2 billion, reinforcing the ATO Gold Mine's position as a true powerhouse in the precious metals industry. 

The Company’s Commitment To Local Life And The Environment  

Steppe Gold places paramount importance on the safety of its personnel and is firmly committed to ensuring their well-being above all else. A cooperation agreement has been inked by Steppe Gold with the local province, forging a partnership that guarantees a mutually advantageous working environment for all involved parties. 

Furthermore, Steppe Gold ardently promotes and is actively expanding its base of local shareholders, while concurrently planning a dual listing on the Mongolian Stock Exchange. These strategic moves are poised to fortify the company's ties within the local community and bolster its presence in the Mongolian market.

Steppe’s executive team has a proven track record in capital markets and the mining sector, including delivering on a $500m exit in Mongolia in the past. Not only that, Steppe is proudly Mongolian. They have deep relationships with every level of government, with 99% of their team being Mongolian nationals, while 75% come from local communities. Steppe Gold has also given financial aid and scholarships to over 1,600 local students. 

Steppe Gold (TSX:STGO) Is Already Generating Revenues

In the third quarter of 2023, Steppe Gold’s revenue reached $14.2M, and for the first half of the year, it amounted to $23.8M. These numbers were primarily driven by the sale of 6,880 ounces of gold and 11,888 ounces of gold, with average prices per ounce of $1907 and $1900, respectively. In addition, silver sales during the same periods totalled 29,198 ounces and 29,850 ounces, with average realized prices of $23 and $21 per ounce. 

The company’s adjusted EBITDA, after accounting for stream payments, demonstrated strength, amounting to $2.8M for the three months and $4.9M for the six months ending on June 30, 2023.

As of June 30, 2023, their cash reserves stood at $5.7M. In terms of financial obligations, their total bank and other debt reached $16.7M, resulting in a net debt of $10.9M, inclusive of payables and other liabilities.

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When we delve into key investors, we can’t miss Eric Sprott. Eric Sprott is known for his expertise in precious metals, particularly gold and silver, and he has been a prominent figure in the resource and mining sectors. It is also important to highlight the presence of Fidelity International, which is known for its expertise in asset management and has a long history in the financial industry. 

Management Overview - https://steppegold.com/corporate/management/

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President - Byambatseren Tsogbadrakh

Ms Byambatseren Tsogbadrakh, a Mongolian national, is a founding member of the Steppe Gold team.

With years of experience in the field of finance, she has progressively held senior positions within the Company for an extended period.

Director - Matthew Wood

Mr. Wood is a mineral resource explorer and developer with over 30 years of global industry experience in mining investments. Founder of Hunnu Coal Limited sold for~A$500M (2011). Awarded the Order of the Polar Star, the highest state honour that can be awarded to a non-citizen of Mongolia.

Executive Vice President & Director - Aneel Waraich 

Mr. Waraich is a financial services professional with 15 years of progressive experience in capital markets having worked on over $1B in deals. Founder of ATMA Capital Markets focusing on advising public and private companies in the Natural Resources sector.

Senior Vice President & CFO - Jeremy South

Mr. South has over 35 years of experience in M&A, capital markets and private equity in Europe, North America and Australia, including senior positions in investment banking at Deutsche Bank, NatWest Markets and Deloitte. He has been working in Mongolia since 2011.

Chief Operating Officer - Greg Wood

Mr. Wood was a Systems Accountant with over 12 years extensive experience in financial reporting, financial analysis, developing key performance indicators and modelling of financial reports over a number of industries including transport, media and infrastructure and held management positions at Asciano and Patrick Stevedores.

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The Company Has Already Achieved The Following Milestones Since 2016:

• 2016: Established in Mongolia 
• 2017: Acquired ATO and UK Projects
• 2018: CA$25M IPO at the TSX 
• 2019: Built Heap Leach Mine and Plant/ATO Phase 1
• 2020: Commercial gold production at the ATO Gold Mine 
• 2021: Doubled resources and completed Phase 2 FS
• 2023: Secured $150M financing for Phase 2 Expansion
• 2025: Phase 2 Expansion production 100koz AuEq per annum
• 2037: ATO Gold Mine - Mine life

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So, What’s Next for Steppe Gold?  

The Phase 2 Expansion, fully funded at $150 million, has already commenced in October. It is estimated to be completed by the end of 2025, with commercial production set to begin in 2026. This expansion is expected to triple the production capacity, yielding over 100,000 ounces annually for a span of 12 years, resulting in more than 1.2 million ounces of gold equivalent. 

Simultaneously, Phase 1 heap leach operations continue, delivering 7,587 ounces of gold and 20,757 ounces of silver in the third quarter alone. Year-to-date totals now stand at 20,686 ounces of gold and 57,995 ounces of silver.

Moreover, ongoing exploration and drilling programs are underway within the 5,500-hectare ATO license area. The focus remains on identifying additional oxide zones, with less than 10% of the license area explored to date. The company is committed to uncovering further opportunities in this promising region.

Why Steppe Gold Is A Worthy Pick In The Evolving Gold Market  

• Steppe Gold is a Mongolia-focused gold company: Steppe Gold is a company specializing in the exploration and extraction of gold and silver in Mongolia, particularly in the Khundii Gold District. 
• ATO Gold Mine's significant reserves and production plans: The ATO Gold Mine, owned by Steppe Gold, covers a large area in Mongolia's Dornod region and has substantial mineral reserves, including 1.7 million ounces of gold equivalent. 
• Ongoing expansion and funding: Steppe Gold has secured $150 million in funding for Phase II of the ATO Gold Mine, which is expected to commence production by the fourth quarter of 2025.
• Financial performance: In the third quarter of 2023, Steppe Gold generated $14.2 million in revenue, primarily driven by the sale of gold and silver. Their adjusted EBITDA for the six months ending June 30, 2023, amounted to $4.9 million.
• Commitment to local community and sponsorship: Steppe Gold places a strong emphasis on safety and has a cooperation agreement with the local province. They are actively expanding their base of local shareholders and planning a dual listing on the Mongolian Stock Exchange to strengthen ties with the local community. 

‍A Summary For Investors

Steppe Gold stands out as an attractive investment option as a gold-producing entity whose market valuation doesn't yet match its potential, especially considering imminent expansion prospects that will intrigue investors looking for a gold company with a vibrant narrative. Steppe checks all the criteria for an investment that promises to continually enhance shareholder value. With funding for its projects firmly in place and scale-up operations in full swing, Steppe Gold is on track to elevate its status to that of a mid-tier gold producer, ensuring robust cash flow for an extended duration of its mining operations. The company's prospects position it as a noteworthy candidate for those interested in the dual benefits of value and growth within the gold mining domain.

Where To Find Steppe Gold & Learn More About The Company

Steppe Gold trades on the TSX under the symbol $STGO. 

Explore the stock further here: https://steppegold.com/investors/stock-information/

You can sign up for the company’s newsletter and get free access to exclusive Mongolia mining industry reports here: https://steppegold.com/contact/

Toronto Office:

Steppe Gold Limited.

90 Adelaide Street. W, Suite 400 Toronto,
ON M5H 3V9, Canada

Tel: +1 647 697 0577

Disclaimer

The article titled "From Steppe To Summit: The Ascendancy of Steppe Gold in Mongolia’s Mining Scene" featured above is provided as a voluntary showcase of the company's achievements and endeavours. Steppe Gold a valued media client of First Phase Capital, maintains a month-to-month retainer agreement at $5,500.00 CAD per month for their comprehensive marketing needs. The article in question was conceived, written, and reviewed in-house by First Phase Capital's editorial team. Steppe Gold had the opportunity to review the content solely for accuracy and factual correctness before its publication. Any claims, statements, or representations within the article reflect the publication’s view and not necessarily that of Steppe Gold.