The price of gold continues to showcase its historic role of being a stabilizer in turbulent times. With the coronavirus beginning to become a global epidemic, gold has reached all-time highs in numerous currencies and is at a seven-year high on a USD basis.
As the chart below indicates, this rally still has lots of room to run as gold in global portfolios is far below past peaks.
A company to have on your radar screens in the coming weeks is Steppe Gold. One of the world’s newest gold producers located in Mongolia. The company is expected to produce 60,000 ounces in 2020, with cash costs being USD $550. At today’s gold prices, the company will be generating significant free cash flow. The companies market cap is presently a little over 40 million, which given the asset, exploration potential, and soon to be cash flow is ridiculously cheap.
The company purchased the asset from Centerra Gold in 2017. Centerra spent just under 30 million USD on the project and drilled 67,000 meters, which led to the ATO gold discovery. Steppe has drilled 30,000 meters since taking over the project and has made it well known that resource updates will be coming for the ATO deposits including the Mungu discovery that is only half a kilometer away from the ATO project.
The company currently has 400,000 tons of ore at 1.99 grams/ton gold on the leach pad, and the leaching is set to begin in Q1. With significant cash flow coming online shortly, the company is self-sufficient with regards to further dilution to extensively drill its deposits. The company’s first intercept on Mungu was 46 meters at 15 grams gold and 82 grams silver, which represents a very robust fresh rock deposit that could potentially add significant ounces to their resources.
The company is aiming to be Mongolia’s premier precious metals company in the years to come and has showcased the Mongolian government as being a pro-mining, pro-foreign investment country. Half of Steppe Golds’ directors are Mongolians alongside all of the company’s in-country employees except two are locals, which showcases the companies dedication of being a strong part of the community in the years to come. The company recently announced an investment from a Mongolian National Investment Fund, which further validates in-country support.
As gold continues to gain support and interest from investors from other sectors, expect to hear lots of news from Steppe Gold in the coming months:
- high margin gold operations come online
- resource updates from 4 deposits
- on-going drilling in 2020
It seems the company is poised for a big year and represents an opportunity for investors to be a part of a high-growth gold story with many catalysts.