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 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 mainboard mining IPO in 2018, raising $25 million. The Company is headquartered out of Ulaanbaatar, Mongolia.
- Steppe Gold's flagship project Altan Tsaagan Ovoo (ATO) is fully constructed and recently begun producing gold and silver. On April 22, 2020 Steppe produced its first gold pour and has now sold 5,233 Oz of gold and 1,372 oz of silver, which has generated $8.5M net cash flow before stream obligations. The Company remains on track to produce 60,000 oz of gold in 2020.
- The Company is now mining, crushing and stacking at a rate of ~3,500 tonnes per day, and has accumulated 650,000 tonnes mined at a grade of 2.0g/t gold on cell 1 of the leach pad. Because the Company had a stockpile of ore already stacked, we anticipate a higher amount of gold collected in year 1.
- The ATO property is projected to produce strong annual cash flows with 2020 production expected to produce ~60,000 oz of gold per annum from the heap leach operation with cash cost per ounce of ~US$550 over the life of the mine.
- 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. With gold commencing at ATO, the Company plans to continue its exploration programs with a revised resource and reserve statement in Q4 2020 or Q1 2021.
- 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. 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.
- The Company announced the final tranche of its private placement on January 30, 2020 of 2,612,222 common shares at a price of C$0.90 per share for aggregate gross proceeds of $2,351,000. In addition, the Company also closed a USD $3M convertible debenture financing with the Mongolian National Strategic Investment Fund. The debenture bears interest at 12% per annum and is convertible at $0.68
- Based on our DCF and Comparable Companies analysis of STGO, we arrive at a valuation range of ~CAD$2.08-$2.45, with a midpoint of ~$2.26; 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, CFA
SOURCE: Stonegate Capital Partners
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