The gold price continues its upward momentum as central banks around the world continue to endlessly print money to keep asset classes inflated, which mainly includes the bond market. Many government bonds are currently yielding negative, which is an indication that we are in the midst of a historic wealth transfer from debt and into gold. In fact, 25% of all bonds in the world trade at negative interest rates.
Meaning gold has a better yield than 25% of outstanding bonds globally. On top of gold being an excellent wealth preservation tool, yielding zero might be a very important aspect as more and more bonds trend towards negative yield territory.
One of the newest gold producers, Steppe Gold (TMX: STGO) is set to take advantage of this exciting gold environment with lots of catalysts in the pipeline for the remainder of the year. The company has set guidance for producing 60,000 ounces of gold in 2020 with cash costs of circa $500 per ounce at 100% owned ATO mine. On May 11th, the company announced its first gold and silver sales. Per the news release, the company has sold a total of 5,233 ounces of gold and 1,372 ounces of silver in two separate deliveries to the Central Bank of Mongolia. This has generated the company cash flow of US $8.5 million.
With Steppe now officially being in production and generating cash flow, the company is quickly becoming one of the leading gold producers in Mongolia. The mining sector currently accounts for 20% of GDP and 80% of exports in Mongolia.
On top of production, it is expected that the company will be very active on the exploration front for the remainder of 2020.
Currently, the company is awaiting exploration drilling results for approximately 11,000 meters of diamond core drilling targeting extensions at depth on the ATO1, ATO4 and Mungu deposits. The results should be released in the coming months. It is expected that the company will be updating the ATO gold mine resources alongside a new resource estimate on its Mungu deposit.
The exploration potential at Mungu is very exciting given it’s a high-grade system. The deposit is located northeast of the company’s ATO mine. It is a structurally controlled epithermal gold-silver system with localized bonanza grades.
The first drilling by Steppe at Mungu returned 15g/t Au and 82 g/t Ag over 46m. Very little effective drilling has been undertaken to date away from the Mungu discovery. As you will see in the image below, the northern extension of pipe 4 to Mungu and to the north remains open along strike and depth.
In a prior interview, the company has said that after the 11,000 meters of drilling results are assessed and released, they will provide a comment on the next steps with regards to further drilling.
In the meantime, the company is set to begin trenching and drilling on the exciting and yet to be drilled UK license down in the Bayankhongor gold belt where Erdene Resources has had exciting and strong results directly to the North and South of the 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.
Make sure to watch Steppe Gold this year as it has many catalysts for the rest of 2020, including:
- Continued Production at the Companies 100% owned ATO Mine
- Resource upgrades for ATO deposits and an initial resource estimate at Mungu
- Commencing drilling programs to follow-up on the four new discoveries made at the “UK” gold project
- Completion of an updated feasibility study for Phase 2 production increasing annual gold production to 150,000 ounces
The companies stock symbol:
STGO on the Toronto Stock Exchange with a present market cap of $69 million.
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