Successfully Demonstrates Robust, Long Life Operation At ATO
Steppe Gold Ltd (TSX: STGO) (OTCQX:STPGF)has received positive results of a Feasibility Study on the 100% owned ATO Gold Project in Mongolia.
President and CEO, Bataa Tumur-Ochir, said the results comprise a further two years at the producing oxide phase and a 10.5 year expansion (Phase 2 Expansion), for a 12.5 year aggregate mine life. The results reinforce the company’s current Phase 2 Expansion plans with construction already underway, and existing permitting and infrastructure in place.
- Pre-Tax NPV(5%) of US$320 million with an IRR of 109% and a Post-Tax NPV(5%) of US$232 million with an IRR of 67%, driven by rapid payback of three years from initial capital outlay
- Total gross revenue of US$1.72 billion and EBITDA of US$584 million over 12.5 years, with first concentrate production anticipated in Q4 2023.
- 106k oz of annual gold equivalent ounce production in years 1-5 of the Phase 2 Expansion, following depletion of the oxide zone
- Average site AISC of US$853/gold equivalent ounces, with solid plans to optimize, notably with grid power
- Initial capital expenditure, prior to optimisations, is expected to be US$128 million (including a US$12 million contingency)
- Phase 2 Expansion assumes processing 2.2 million tonnes per annum incorporating crushing, grinding and flotation of concentrates
- Gold recovery is forecast to be 79% with further recoveries of up to estimated 10% through CIP/CIL plant in later years
“Following our highly encouraging resource update earlier this year, we are very pleased to share the Feasibility Study results. These results reinforce Steppe Gold’s commitment to creating shareholder value from our exciting and growing portfolio of precious metal assets. We are confident that our flagship asset, the ATO Gold Project, will deliver significant upside for all stakeholders with the robust economics from this project and infrastructure already in place,” Bataa Tumur-Ochir said.
“The 2021 Feasibility Study highlights a positive economic project for the Phase 2 Expansion at the ATO Gold Mine. This has confirmed an expanded life of mine to 12.5 years producing gross revenues of US$1.72 billion, EBITDA of US$584 million with an initial capex of US$128 million and site AISC of $853/oz of Au Eq.
“With a conservative metal prices modelled, including US$1,610 per gold ounce, the ATO Gold Project is shown to deliver a solid set of results, featuring strong cash flows and a rapid payback of capital.
“Importantly, Steppe Gold has already started construction work which will benefit the Phase 2 Expansion, with a new 2.5Mt per annum fixed crusher now being installed and expanded infrastructure underway. The Phase 2 Expansion project has all major permits in hand and we anticipate first concentrates in Q4 2023.
“We have numerous plans underway to further optimize the Phase 2 Expansion to include planned connection to grid power, optimization of construction and engineering costs, and further exploration and remodelling to support higher conversion of resources to reserves.
“Furthermore, with planned production in 2022 and 2023 for a total of 100k oz, at Site AISC of $687/oz, from the oxide zone we have a strong position to source the required additional capital.
“As communicated in previous shareholder updates, discussions with project lenders are advancing. Timely debt financing will allow the Phase 2 construction that is already underway, to continue uninterrupted.”
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