viewSteppe Gold Limited

Steppe Gold delivers strong 4Q results with US$13.2M in revenue and market-low cash costs

The company produced 7,923 gold ounces at a realized price per ounce of $1,882 and 3,429 silver ounces at $23 from its ATO gold operation at an all-in sustaining cost of US$902

Steppe Gold Limited -
Ulanbaatar-based Steppe started production from the ATO gold mine in March 2020

Steppe Gold Limited (TSE:STGO) (OTCQX:STPGF) reported its 4Q results on Tuesday morning that saw the Mongolia-focused miner deliver US$13.2 million in revenue on very strong margins.

The company produced 7,923 gold ounces at a realized price per ounce of US$1,882 and 3,429 silver ounces at US$23 from its ATO gold operation at an all-in sustaining cost of US$902.

Cash flow remained strong, with operating income coming in at just over US$8.3 million thanks to cash costs coming in at US$607 per ounce sold. The group finished the quarter ended December 31, 2020 with US$32.6 million in cash.

READ: Steppe Gold announces 3Q cash flow of US$12.7 million from its ATO gold mine in Mongolia

Ulanbaatar-based Steppe started production from the ATO gold mine in March 2020. The company is slowly increasing the grade of gold mined, which averaged around 2.3 grams per ton in 4Q compared to 2.2 in 3Q and 1.7 in 2Q, its first quarter of production.

In total, ATO has delivered nearly US$52.1 million in revenue in its first year of production. For the 2020 fiscal year, Steppe sold 31,733 gold ounces and 13,710 silver ounces with average realized prices per ounce of US$1,822 and US$20 respectively. Operating income for the year came in at US$32.6 million.

"We are very pleased to report a strong start to production at the ATO Gold Mine with operating cash flow from mine operations in 2020 of $32.6m, on revenue of $52.1m, in an approximate 9 months of production,” Steppe’s CEO Bataa Tumur-Ochir said in a statement accompanying the results.

“Most importantly we are proud to report a zero accident safety record at the project, and our exemplary environmental record has been recognised with a 93% result on the latest environment audit. Cash costs remain at market-low levels at $607 per ounce sold for the year and this allowed us to build up a solid cash balance, ending the year at $32.6 million.”

Bankable feasibility study in the works

Tumur-Ochir said that discussions with Mongolian and international lenders are progressing well, and the miner is optimistic that it will obtain debt financing for its Phase 2 expansion now underway. Steppe is advancing towards a bankable feasibility study for the Phase 2 expansion, incorporating the recent resource update and a detailed series of new metallurgical work.

The bankable study is due for release in summer 2021.

In addition, Steppe completed an active period of drilling at ATO and Mungu in 2020, focusing on extension and infill drilling that contributed to resource upgrades on the existing ATO deposits and the maiden resource on the Mungu Discovery.

“With a new fixed crusher in place this summer, we are planning a record year for stacking in 2021,” Tumur-Ochir told shareholders. “We have paused production in the first quarter with extreme cold weather conditions and we expect to resume production shortly. We have seen some bottleneck in supply of critical reagents and this will impact second quarter production as we conserve supplies for the important summer months. Hopefully this issue is temporary and will be resolved shortly.”

The ATO resource now stands at 2.5 million gold equivalent ounces.

Steppe is targeting annual production in 2021 and 2022 of between 50,000 to 60,000 ounces before transitioning to fresh rock ores in 2023. Production forecasts for 2021 are dependent on a restart of leaching in April 2021.

Contact Angela at angela@proactiveinvestors.com

Follow her on Twitter @AHarmantas

Quick facts: Steppe Gold Limited


Price: 1.27 CAD

Market Cap: $86.9 m

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