Disclaimer: Steppe Gold is a paying advertiser on the Gold Telegraph and the author owns shares in the company. Please see full disclosure at the bottom of the article.
Central banks around the world continue to buy gold to diversify their reserves. In a report published in June, the World Gold Council said that 21% of central banks expect to increase their gold reserves within the next year. Mongolia has been one of the countries buying in 2021.
Mongolia has increased its official gold purchases this year by buying 11 metric tons as the country’s central bank has said gold helps with the country’s economic stability.
One of Mongolia’s newest gold producers, Steppe Gold, continues to focus on unlocking shareholder wealth through ongoing cash-flow generation and expansion at its flagship asset, the ATO gold mine and exploration at its Uudam Khundii “UK” Project.
ATO Gold Mine:
Many of my subscribers are familiar with the mine, but here is a bit of a background for new readers. The ATO Project is located in the territory of Tsagaan Ovoo soum, Dornod province of Eastern Mongolia.
The company has already been in commercial production for about a year and has set guidance to produce 50,000 ounces of gold from its oxide zone over the next 12 months, with cash costs expected to remain near $550 per ounce, representing industry low levels.
In early 2021 the company announced the successful expansion of its resource by doubling its size to 2.45 million gold equivalent.
Notably, the company published its maiden resource at the Mungu discovery, which showed the M&I resource of 7.57 Mt at 1.74g/t for 424,000oz gold equivalent, located immediately northeast of the current resource at the ATO Project.
The company paused production in the first quarter due to cold weather conditions. Still, it resumed leaching in early April with a successful gold pour in late April. The company remains on track to produce 50,000 ounces over the next year. It is expected the company will transition to fresh rock ores in 2023 to produce 150,000 gold ounces equivalent annually with an initial 10 year mine life.
It is worth noting that the company will be operating year-round next year as Steppe has almost completed construction on a new boiler house that will be used for winter leaching and production. It is estimated that it will be operational by September.
The company plans to publish a feasibility study in the coming weeks, which will be an exciting milestone as it looks to ramp up towards its Phase II expansion phase.
Uudam Khundii “UK” Project
The Uudam Khundii property is comprised of one exploration licence covering 14,397 hectares. The project area is located 800 km south-west of Ulaanbaatar. The property is located between and adjoining the Bayan Khundii gold discovery and Altan Nar epithermal gold deposits explored by Erdene Resource Development Corporation who have a lot of success in the recent years on their exploration results and in identifying new discoveries, in addition to the + 1.1M ounces they currently have across these two deposits.
For new readers, I highly recommend this article I wrote last year on the area that touches on the UK’s potential.
The company has identified 4 prospective zones which are expected to continue to be explored for the remainder of this year in addition to a drill program.
The four discoveries:
- Altan Sum
- Golden Steppe
- Milky Way
- Blue Hill
So far, the company completed 18 trenches for 933 meters in 2020 at the Milky Way Prospect and the Altan Soum Prospect.
At the Milky Way Prospect, initial trenching results have highlighted a mineralized system of at least 700 meters in length and up to 12metres wide with individual meter sampling results up to 1.49g/t gold, 450g/t silver, 2.98% copper, 3.98% lead and 0.31% Zinc.
These are very exciting initial results on the project, enabling the company to develop some high-quality drilling targets for the upcoming drill program, which will commence in the coming months.
Final Thoughts:
In a weak commodity market, now is the optimal time to be looking at a company like Steppe Gold, with a strong cash balance and such an aggressive longterm growth strategy. The company will remain very busy for the remainder of the year with continued ongoing production, expansion into phase II and exploration at the UK project with a highly anticipated maiden drilling program.
Steppe is also considering listing on a major Asian stock exchange which should bring in more visibility. The company has estimated that at least 30% of its shareholders are based in Asian time zones.
In about a month, I will be catching up with Steppe’s Executive Vice President and Director, Aneel Waraich, once again for another Q&A.
There will be plenty of things to go over, such as the upcoming phase II transition of the ATO mine and exploration at the UK project.
Visit the company’s corporate presentation, here.
Visit the company’s website, here.
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