Stonegate Capital Partners Updates Coverage on Steppe Gold Ltd. (TSX:STGO)

DALLAS, TX / ACCESSWIRE / December 10, 2019 / Steppe Gold Ltd. (TSX:STGO)

The full report can be accessed by clicking on the following link: http://stonegateinc.com/reports/STGO%20Q3FY19%20.pdf

COMPANY DESCRIPTION

Steppe Gold Ltd. (TSX:STGO) 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 beginning in the fourth quarter. 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 main board mining IPO in 2018 raising $25 million. The Company is headquartered out of Ulaanbaatar, Mongolia.

SUMMARY

Steppe Gold's flagship project Altan Tsaagan Ovoo (ATO) is fully constructed and recently received its final cyanide permit in Q4 2019, which allows production to begin. The Company had been awaiting the final permitting to begin the leaching process on its approximately 300,000 tonnes of material. The company is expected to begin recognizing revenue in Q1 2020.
The Company has been trial mining at ATO since November 2018, which has accumulated 300,000 tonnes mined at a grade of 2.13g/t gold for approximately 22,000 oz of gold currently crushed and stacked on Cell 1 of the leach pad. With permitting now complete, production will soon commence.
The ATO property is projected to produce strong annual cash flows once production commences 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.
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 a private placement of US$8.4 million completed in August 2019. Due to additional interest, the offering increased from the original US$5.4M of 10% 2-year unsecured convertible debentures exercisable at CAD$0.70/sh. With production beginning in Q1 2020, this should be sufficient to fund the Company's operations in the near term, however, an additional financing may be necessary for planned expansion.
The Company has strong ownership from key shareholders and insiders. The top 4 shareholders consisting of LIM advisors (11.94%), Atmacorp Asset Management (6.11%), Triple Flag Mining Finance (5.00%), and Elliott Management Corp. (3.6%) own approximately 26.6% of the shares outstanding
Based on our DCF and Comparable Companies analysis of STGO, we arrive at a valuation range of ~CAD$0.60 to $2.00, with a midpoint of ~$1.27; 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.

CONTACT:

Stonegate Capital Partners
Shane Martin, CFA
(214) 987-4121
shane@stonegateinc.com

SOURCE: Stonegate Capital Partners

ReleaseID: 569643