Steppe Gold Ltd. (TSX:STGO) has made significant strides in expanding its gold production capabilities in Mongolia, according to an updated report by Stonegate Capital Partners. The company's acquisition of Boroo Gold from Boroo Singapore, which closed on August 1, 2024, has established Steppe as the leading gold producer in Mongolia.
The Boroo Mine, now under Steppe's ownership, is expected to produce 65,000 to 70,000 ounces of gold annually, with a projected total production of 430,000 ounces through 2031. This acquisition is set to boost Steppe's combined production to 80,000-85,000 ounces in both 2024 and 2025. The Boroo Mine's net present value (NPV) is estimated at $260.1 million, based on a 7.5% discount rate and a gold price of $2,300 per ounce, which is notably higher than current spot prices, suggesting potential upside.
In a parallel move, Steppe has sold its Tres Cruces Project to Boroo Singapore for approximately CAD$12.0 million, refocusing its operations on Mongolia and improving liquidity. This transaction, also completed on August 1, 2024, involves cash payments over an 18-month period.
Steppe's flagship ATO Gold Mine continues to perform, with 62,181 tonnes of ore mined and 125,898 tonnes stacked at an average grade of 0.56g/t in the third quarter of 2024. The company is progressing with the ATO expansion, which boasts an after-tax NPV5% of US$242 million and an IRR of 67%, based on conservative gold price estimates. When adjusted for a gold price of $2,300 per ounce, the ATO project's NPV rises to $422.6 million.
These developments collectively strengthen Steppe Gold's position in the gold mining industry, potentially offering significant value to investors. The company's focus on expanding operations in Mongolia, coupled with the strategic divestment of non-core assets, demonstrates a clear growth strategy in a region with promising gold production potential.
