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

DALLAS, TX / ACCESSWIRE / October 21, 2019 / Steppe Gold Ltd. (STGO.TO)


Steppe Gold Ltd. (STGO.TO) 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 expected production to begin in the second half of 2019. 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 $25 million. The Company is headquartered out of Toronto, ON.

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  • Steppe Gold's flagship project Altan Tsaagan Ovoo (ATO) is fully constructed and awaiting final cyanide permitting with gold production anticipated to begin in the second half of 2019. As of 6/30/2019, the Company has completed internal commissioning of the ADR plant and awaiting final cyanide permitting before irrigation and gold production can commence.
  • The Company has been trial mining at ATO since November 2018, which has accumulated 230,000 tons mined at a grade of 2.3g/t gold for approximately 17,000 oz of gold currently crushed and stacked on Cell 1 of the leach pad.
  • The ATO property is projected to produce strong annual cash flows once production commences with initial years of production expected to produce ~40,000 oz of gold per annum from the heap leach operation with cash cost per ounce of ~US$550.
  • Upside potential for the flagship project remains as 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. These expansion projects could lead to an increase in resources and expanded 150,000 oz per annum fresh rock crush and CIL operation.
  • 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.
  • STGO's management is well established and has a long operating history in Mongolia. Matthew Wood, CEO, was formally the founder and executive chairman of Mongolian coal company, Hunnu Coal limited and has been awarded the Order of the Polar Star, the highest state honor that can be awarded a non-citizen of Mongolia. Mr. Wood has many key relationships in Mongolia and brings over 25 years of mining and commodities investing experience to the team.
  • The Company announced a private placement of US$8.4 million completed in August 2019. Due to additional interest, the offering increased from the original US$5.4M of 10% 2-year unsecured convertible debentures exercisable at CAD$0.90/sh. Anticipating near term approval of the final cyanide permit, this should be sufficient to fund the Company's operations to profitability.
  • The Company has strong ownership from key shareholders and insiders. The top 4 shareholders consisting of LIM advisors (11.94%), Atmacorp Asset Management (6.05%), Triple Flag Mining Finance (5.00%), and Elliott Management Corp. (3.6%) own approximately 26.6% of the shares outstanding.
  • Based on our DCF and Comparable Companies analysis of STGO, we arrive at a valuation range of ~CAD$0.61 to $1.85, with a midpoint of ~$1.20; 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.

Shane Martin

SOURCE: Stonegate Capital Partners

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