As the Federal Reserve continues to expand its balance sheet to help support financial markets, gold continues to provide a form of stability for investors. Gold is currently up nearly 20% against the U.S. dollar over the past six months while trading at all-time highs in most fiat currencies.
Most notably, in Mongolian Tugrik terms, gold is currently hovering around all-time-highs. This has worked out great for one of the world’s newest gold producers, Steppe Gold, which is located in Mongolia.
The companies 100% owned ATO gold mine is located in the territory of Tsagaan Ovoo soum, Dornod province of Eastern Mongolia. The company has set guidance for producing 60,000 ounces of gold in 2020, with cash costs coming in at U.S. $550.
In early May, the company announced its first gold and silver sale, selling a total of 5,233 ounces of gold and 1,372 ounces of silver in two separate deliveries to the central bank of Mongolia, which has generated US$8.5 million in cash flow before stream obligations for the company.
In the May 11th news release, the Central Bank of Mongolia stated:
“We are happy to welcome Mongolia’s most recent gold producer. Steppe Gold is playing a vital role in growing our gold production and contributing to the foreign exchange reserves in Mongolia.”
Steppe Gold is set to become Mongolia’s premier precious metals in the years to come as it aggressively peruses expansion. The company plans on using its cash flow from the ATO mine towards studies to expand the open pit and processing facilities for the company to increase gold production to a targeted 150,000 ounces of gold per annum. The company plans on providing new resource estimates for ATO and the Mungu deposit by the end of the year.
In the near term, to coincide with on-going production and cash flow generation at the ATO mine, the company will receive drilling results for approximately 11,000 meters of diamond core drilling targeting extensions at depth on the ATO1, ATO4 and Mungu deposits which will be available in the coming months.
The company is also preparing to drill its UK project, which is comprised of one exploration license covering 14,397 hectares.
The property is located between and adjoining the Bayan Khundii gold discovery and Altan Nar epithermal gold deposits explored by Erdene Resource Development Corporation. The company expects to drill this project this summer and is focused on the four new discoveries identified on the property:
- Golden Arrow
- Golden Steppe
- Milky Way
- Blue Hill
We recently caught up with Aneel Waraich, Executive Vice President and Director of Steppe Gold, and asked about production and exploration plans for this upcoming summer:
How is production going at the ATO gold mine, is everything going smoothly operationally so far?
“We have now been leaching and processing since end of March. We are in month 3 of production and things have been going very well operationally. We continue to produce gold and silver and of course working on stabilizing and optimizing our production process every week.
We have been very luck to have a strong and skilled Mongolian operational team that has allowed us to bring production online and operate in what has been a tougher environment with travel restrictions and border closings related to the global pandemic.
Our team is doing well and continuing to improve the gold and silver recovery and pouring process. We look forward to updating our shareholders and market in the coming weeks on how the operation is performing.”
Will assays be released in the near term on the 11,000 meters drilled on the ATO and Mungu deposits?
“We expect results from the 11,000 meters in July sometime. These are mainly infill and confirmatory results that allow us to put our maiden resource on Mungu and also update the ATO deposits. We look forward to these results and most importantly incorporating them into our resource and reserve update 60-90 days after these are received.”
Is there any rough estimates on how many meters will be drilled at the UK property?
“It is a bit early to say how many meters we will drill at the UK property. As previously mentioned, we plan on starting trenching first and then a drilling program in July also and are very excited to get going on this undrilled license. We plan to update the market mid-July on the commencement and planned drilled program at the UK project.”
At present gold prices, if things continue to operate smoothly at ATO, is the company still anticipating an EBITDA of $40+ million?
“Currently, we do believe we can hit the forecasted EBITDA of $40M+ USD and also expect net cash on balance sheet to be +$20M USD at the end of the year. This is net of sustaining Capex, resource and reserve updates, feasibility spend on phase 2 and exploration programs on UK and ATO/Mungu.”
Steppe Gold trades on the Toronto Stock Exchange under the symbol STGO. To learn more about the company, please visit: https://steppegold.com/
Legal Notice / Disclaimer
The Gold Telegraph, goldtelegraph.com, hereafter known as Gold Telegraph.
Please read the entire Disclaimer carefully before you use this website or read the newsletter. If you do not agree to all the Gold Telegraph Disclaimer, do not access/read this website/newsletter/article, or any of its pages. By reading/using this Gold Telegraph website/newsletter/article, and whether or not you actually read this Disclaimer, you are deemed to have accepted it.
Any Gold Telegraph document is not, and should not be, construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.
Gold Telegraph has based this document on information obtained from sources he believes to be reliable but which has not been independently verified. Gold Telegraph makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold Telegraph/Author only and are subject to change without notice.
The Gold Telegraph/Author assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, The Gold Telegraph/Author assumes no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this The Gold Telegraph/Author report.
The Gold Telegraph/Author is not a registered broker/financial advisor and does not hold any licenses. These are solely personal thoughts and opinions about finance and/or investments – no information posted on this site is to be considered investment advice or a recommendation to do anything involving finance or money aside from performing your own due diligence and consulting with your personal registered broker/financial advisor. You agree that by reading The Gold Telegraph/Author articles, you are acting at your OWN RISK. In no event should The Gold Telegraph/Author be liable for any direct or indirect trading losses caused by any information contained in The Gold Telegraph articles. Information in Gold Telegraph/Author articles is not an offer to sell or a solicitation of an offer to buy any security. The Gold Telegraph/Author is not suggesting the transacting of any financial instruments but does suggest consulting your own registered broker/financial advisor with regards to any such transactions
The author does own shares of Steppe Gold (TSX:STGO). STGO is a paid advertiser on the Gold Telegraph.