Mongolia’s premier precious metals company, Steppe Gold, is poised to have a big 2020 with production still on track to begin in Q1. As touched on in our last article, Steppe is expected to produce 60,000 with cash costs coming in around $550. This signifies the company will generate significant free cash flow in the coming year as it continues on to its phase II plan. Phase II will consist of completing the feasibility study on the expansion of the fully permittedATO gold mine to produce approximately 150,000 ounces of gold per annum.
The coronavirus has rocked financial markets this past week, as the global economy braces for economic downturn, global shares have fallen almost 30% from their peaks.
However, gold and gold mining stocks have showcased their strength in times of economic turbulence as they have outperformed the market so far in 2020. There was a temporary sell-off in the metal due to margin calls via liquidity crunch, but now investors are fleeing back to gold and gold mining companies quite aggressively.
One of the reasons individuals are rushing back to gold and gold mining companies is due to the likelihood of inflation skyrocketing. With the coronavirus grinding global business to a rampant halt alongside significant supply chain destruction, global production of goods and services has significantly stalled.
Currently, Central Banks have announced numerous programs in the coming weeks to provide extreme amounts of liquidity to the marketplace, which has never been seen before in history. The Federal Reserve recently announced that they are cutting interest rates to ZERO (100 basis-point reduction) and a $700 billion quantitative easing program to purchase a mix of treasury securities and mortgage-backed securities. Many investors are starting to quickly scramble to own gold as a store of wealth and increase exposure to mining companies as they have extreme earnings leverage with rising precious metal prices, and with an economic slowdown presently happening, it will be hard to find companies generating cash.
Steppe Gold is one of the world’s newest gold producers, as it is fully permitted and is expected to produce 60,000 ounces in 2020. We recently caught up with Aneel Waraich, who is the company’s Vice President and we asked him the following questions:
Are things still on track to produce gold in Q1 2020?
“We now have 500k tonnes stacked and if we start leaching end of March and mine, crush and stack another 1M tonnes the rest of year as expected then still on track to produce gross ~60k ounces (notenet to Steppewill be closer to 45k ouncesafter the stream but that still is a lot of ounces and cash flow to us).”
When does the company expect to provide the marketplace with the new resource estimates?
“The new resource estimates would take about 90-120 days. So most likely over the summer we would have that. Reason is we have some unassayed results and then those will be incorporated into the update on all 4 deposits.”
When does drilling begin at the UK project?
“Trenching and drilling most likely to happen in the summer as we want operations to be more stable and generate more cash and we have enough time in summer and fall to drill on Mungu (mungu gap, North etc) as well as UK.”
We would like to caution our readers that these are forward-looking statements, and things can change, especially given the sensitivity of the present health epidemic. But Steppe Gold is still on track to begin leaching in Q1 with first gold pour by the end of April.
Given its cash flow from production and its exploration potential (resource estimates), this is set to be one of the biggest growth mining stories in 2020.
You can review the companies corporate deck, here: http://www.goldtelegraph.com/rch-content/uploads/STGO-Presentation-February-2020-compressed.pdf