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Stonegate Capital Partners Updates Coverage on Steppe Gold Ltd. (TSX:STGO)

Key Takeaways
  • Flagship project starts commercial production
  • ATO property projected to generate positive cash flow
  • Management team experienced

DALLAS, TX -- September 12, 2022 -- Steppe Gold Ltd. (TSX:STGO): The full report can be accessed by clicking on the following link:


Steppe Gold Ltd. is a precious metals exploration and production Company with current operations in Mongolia. The Company is currently developing its 100% owned Altan Tsaagan Ovoo Gold Project (ATO) acquired from Centerra Gold in September 2017, with production recently beginning in March 2020. The Company’s portfolio also contains an 80% ownership in an exploration-stage mineral property called the Uudam Khundii (UK) with a 20% joint venture partner. Steppe Gold became public as the only main board mining IPO in 2018 raising $25M. The Company is headquartered out of Ulaanbaatar, Mongolia.


  • Flagship project starts commercial production - Steppe Gold’s flagship project Altan Tsaagan Ovoo (ATO) is fully constructed and began producing gold and silver in the Spring of 2020. For F21, the ATO mine produced 12,012 oz and sold 12,899 gold oz, and 29,705 silver oz for revenue of $24.1M. For F22, the Company is projecting about 40-50,000 oz of gold recovery driven by stacked ore and additional production. The Company is currently ramping production with Q122 production of 2,385 oz followed by Q222 production of 10,329 oz.
  • ATO property projected to generate positive cash flow - The ATO property is projected to produce strong annual cash flows with annualized production expected to produce ~50,000 oz of gold per annum from the heap leach operation with cash cost per ounce of ~US$550 over the life of the mine. The Company believes this should equate to $40M+ of EBITDA.
  • ATO expansion project moving forward - Steppe has three diamond core exploration drilling rigs focusing on resource extensions at AT01 and AT04 as well as Mungu, a high grade, near surface gold and silver potential site located northeast of the current resources at the ATO project. Importantly, the Company published a bankable feasibility study in November 2021 for the expansion of the ATO Gold mine. Highlights include increased production to 100,000 oz of gold annually, an estimated mine life of 12.5 years, and an after[1]tax NPV5% of US$232M with an IRR of 67%, and a payback in 3 years. Production on phase 2 is expected to start in Q2 2024. Steppe has almost completed the construction and installation of the Phase 2 crushing circuit (1000 tph) which is four times the current capacity. Steppe has just recently announced they have approval to connect to the state grid for power in phase 2 as well which will equate to >$100/oz in savings a significant milestone and achievement.
  • ATO expansion financing in place - The Company announced a $65M project financing raise in November 2021. Of the $65M, approximately $59.7M was funded through the Gold[1]2 National Program, facilitated by the Central Bank of Mongolia. This financing is for a 3- year term at 9% interest paid monthly. This debt capital is expected to fast track its phase two construction of the ATO Gold Mine.
  • Additional exploration assets - Steppe Gold’s Uudam Khundii (UK) property currently encompasses 14,397 hectares located 800km south-west of Ulaanbaatar and holds one exploration license. Steppe Gold has commenced initial exploration activities on the property including geological mapping, geochemical sampling, geophysical surveys, and trenching. Steppe has now commenced a ~3,000m drill program with maiden results expected in early q4 this year.
  • Management team experienced - Management is well established and has a long operating history in Mongolia. The Company’s newly appointed CEO, Bataa Tumur-Ochir, has extensive experience operating in Mongolia as CEO of Wolf Petroleum ltd., an oil and gas exploration Company, and Hunnu Coal Limited, a Mongolian Coal Company.
  • Valuation – We use a DCF analysis off our mine models for phase I and phase II at the ATO mine. Combining the separate valuations for phase I and phase II, we arrive at a range of C$2.00 to C$3.75 with a mid-point of C$3.00. See page 7 for further details.

About Stonegate Capital Partners
Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.

Key Takeaways
  • Flagship project starts commercial production
  • ATO property projected to generate positive cash flow
  • Management team experienced
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