Steppe Gold Continues to Focus on Aggressive Expansion Alongside Generating Free Cash Flow

Precious metals continue to showcase its resiliency in times of economic uncertainty. This week at the FOMC meeting, Jerome Powell went on record to state that the Federal Reserve would continue to endlessly support the markets through the printing press.

The Federal Reserve is currently buying $80 billion a month in treasury notes alongside $40 billion in mortgage-backed securities, to name just two of many support valves the central bank has offered to the economy. The Federal Reserve is also very determined to achieve its inflation target of 2% and has gone on record to say that they will allow inflation to run passed its target to maximize employment. It is quite clear over the next decade, fiat currencies around the world will be debased to help soften the current fiscal and monetary aid, which will only serve as a significant catalyst for gold and silver for years to come.

This present macro environment has truly set the stage for Steppe Gold (TSX: STGO) who is one worlds newest high margin gold producers, to unlock significant shareholder value due to: 

  1. Rising precious metals prices (more margin to increase bottom line) at ATO mine
  2. Major expansion potential due to being exceptionally well-capitalized
  3. A strong management team with a wealth of experience of creating shareholder value
  4. World-class shareholder base in the likes of Eric Sprott, Elliot Management, Triple Flag 
  5. Strong discovery potential as the company owns one of the largest exploration licenses in the very exciting Bayankhongor gold belt

The ATO Mine

The Altan Tsagaan Ovoo gold and silver project is located in the territory of Tsagaan Ovoo soum, Dornod province of Eastern Mongolia.

The ATO Project is comprised of one mining license over an area of 5,492.63 hectares.

The company is now in commercial production and reported a strong second quarter. The second quarter showcased the operation’s high-margin nature as the company produced a total of 15,389 ounces of gold and 4,978 ounces of silver with the all-in sustaining costs coming in at $739 per gold ounce sold. Cash costs for the quarter were $595 per ounce sold. With these elevated precious metal prices, the companies bottom line will benefit immensely as the margins are quite extreme at $1900+ gold in U.S denominated terms.

The company has a bankable feasibility study underway for the expansion of the ATO Gold Mine into fresh rock ores with a planned production profile of approximately 150,000oz gold equivalent per year and an estimated ten-year mine life. The feasibility study is estimated to be completed by March 2021. 

Major Expansion Potential at the ATO Mine

On top of the on-going production at the ATO mine, the company is focused on aggressively expanding the operation by replenishing the reserve profile by discovering more ounces. The company is planning on publishing new resource estimates for the ATO deposit and an initial resource estimate for the Mungu deposit by the end of the year.

On Tuesday, the company announced some exceptional drill results from both ATO and Mungu.

Some of the highlighted results from the 2019 program were:

ATO4 Deposit

  • ATO-357                        22m at 2.4g/t gold from 85 metres
  • ATO-367                        10m at 4.59g/t gold from 219 metres

Mungu Discovery

  • MG-122                         34.3m at 7.6g/t gold, 24.11g/t silver from 259.7 metres
  • MG-130                         33.5m at 2.07g/t gold, 181g/t silver from 286 metres

A new, very high-grade base metal zone has also been discovered underneath the ATO1 Deposit which is now subject to additional drilling in the 2020 drilling program.

A new, very high-grade base metal zone has also been discovered underneath the ATO1 Deposit which is now subject to additional drilling in the 2020 drilling program.

  • ATO-364  | 6.48m at 0.46g/t gold, 40.69g/t silver, 1.39% copper, 4.66% lead and 20.88% zinc.

Some of the results from the 2020 drilling program at the Mungu discovery include:

  • MG-139                         19.3m at 6.77g/t gold, 28.6g/t silver from 219.2 metres
  • MG-140                         22.9m at 4.73g/t gold, 87.10g/t silver from 205.1 metres
  • MG-141                        11m at 4.83g/t gold, 249.03g/t silver from 168 metres
  • MG-142                        21m at 3.77g/t gold, 8.7g/t silver from 269 metres
  • MG-143                        38m at 1.32g/t gold, 78.44g/t silver from 257 metres
  • MG-144                        32m at 1.59g/t gold, 115.8g/t silver from 238 metres

This showcases the high-grade nature of the system that is going to be aggressively drilled for the remainder of the year. In fact, three diamond core drilling rigs are operating at the ATO Gold project on a 24hr basis.

Drilling programs at the ATO Gold Project will be ongoing for the remainder of 2020 and a substantial amount of results are pending that will be reported in the next 30 days.

The Potential for Discovery at the UK Project

The Uudam Khundii property is comprised of one exploration license covering 14,397 hectares. The project area is located 800 km south-west of Ulaanbaatar. 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 2020 exploration program at UK has commenced and the company has already reported some exciting results. The company has identified four prospective zones to explore which are:

  • Blue Hill
  • Milky Way
  • Altan Sum
  • Golden Steppe

To date Steppe Gold has completed 18 trenches for 933 metres in 2020 at the Milky Way Prospect and the Altan Sum Prospect. This work is ongoing with more trenching planned across all four prospects discovered.

At the Milky Way Prospect initial trenching results have highlighted a mineralised system of at least 700 metres in length and up to 12 metres wide with individual meter sampling results up to 1.49g/t gold, 450g/t silver, 2.98% copper, 3.98% lead and 0.31% Zinc. These are exciting early results and the Company is expanding its exploration efforts with a geophysical crew and drilling rig planned to be mobilized to site in the coming month.

Steppe Gold is going to be very active for the remainder of the year on both the production side of the business alongside aggressively pursuing expansion. 

Steppe Gold trades under the symbol STGO on the Toronto Stock Exchange with a market cap of $160 million.

For more information, please visit the companies website… here.


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