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Ulaanbaatar, Mongolia – (Newsfile Corp. – March 30, 2021) – Steppe Gold Limited (TSX: STGO) (“Steppe Gold” or the “Company”) is pleased to announce its financial results for the fourth quarter and year ended December 31, 2020.
The full version of the Condensed Interim Consolidated Financial Statements and Management’s Discussion & Analysis can be viewed on the Company’s website at www.steppegold.com or under the Company’s profile on SEDAR at www.sedar.com. Amounts are expressed in United States dollars unless otherwise noted.
Steppe Gold President and CEO, Mr Bataa Tumur-Ochir commented, “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.
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 government environment audit.
Cash costs remain at market-low levels at $607 per ounce for the year and this allowed us to build up a solid cash balance, ending the year at $32.6m. Discussions with Mongolian and International lenders support our optimistic outlook for debt financing for Phase 2.
We now have approximately 1.7m tonnes of ore mined and 1.25m tonnes stacked on Cells 1 and 2 and, with a new crusher in place this summer, we are planning a record year for stacking in 2021. 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.
With our resource now at 2.45m oz Au Eq, and procurement of long lead capital items now underway, we are focused on increasing our production run rate from the oxide phase through 2021 and 2022 and executing the Phase 2 expansion which has already begun.”
Details of Non-IFRS Performance Measures noted above can be found in the Company’s Management’s Discussion & Analysis.
Year Ended December 31, 2020 Highlights (all figures in US$000s unless stated)
Fourth Quarter Highlights (all figures in US$000s unless stated)
Operational and Financial Summary
The ATO Gold Mine is the sole operating mining asset of the Company. Prior period comparables have been included where appropriate in relation to commercial production beginning in 2020.
| December 31, 2020 | Q4 | Q3 | Q2 | YTD | YTD | ||
| (USD) | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Dec 31, 2020 | Dec 31, 2019 | ||
| Waste Mined | bcm | 119,969 | 109,862 | 68,811 | 318,591 | 8,999 | |
| Ore Mined | tonnes | 291,455 | 362,750 | 330,325 | 1,138,209 | 393,581 | |
| Processed | tonnes | 206,703 | 207,663 | 164,287 | 699,204 | 369,258 | |
| Grade (1) | g/t | 2.26 | 2.21 | 1.67 | 2.03 | – | |
| Gold Recovery(2) | % | 70.0% | 70.0% | 70.0% | 70.0% | – | |
| Gold Produced | oz | 7,423 | 10,342 | 15,389 | 33,154 | – | |
| Gold Sold | oz | 7,923 | 11,352 | 12,458 | 31,733 | – | |
| Silver Produced | oz | 2,508 | 6,516 | 4,978 | 14,002 | – | |
| Silver Sold | oz | 3,429 | 6,553 | 3,728 | 13,710 | – | |
| Revenue | 000’s | 13,217 | 19,360 | 19,520 | 52,097 | – | |
| Cash Cost of Sales | 000’s | (4,868) | (6,633) | (7,474) | (19,546) | – | |
| Gross Profit | 000’s | 7,234 | 11,324 | 9,893 | 28,451 | – | |
| Adjusted capital Expenditure | (182) | 380 | 315 | 940 | – | ||
| Mining Unit Cost | US$/t | 5.40 | 6.34 | 5.04 | 4.31 | – | |
| Processing Unit Cost | US$/t | 8.65 | 4.06 | 3.85 | 6.59 | – | |
| Site G&A Unit Cost | US$/t | 4.77 | 2.48 | 1.93 | 2.92 | – | |
| Cash Cost | US/oz | 604 | 572 | 595 | 607 | – | |
| All-in-Sustaining Cost | US/oz | 895 | 794 | 739 | 842 | – | |
(1) Grade is in respect of the gold grade of ore fed through the heap leach pad.
(2) Gold Recovery of 70% is based on the technical reports and is used to calculate inventories and cost of sales. Actual recoveries may vary
Outlook
The Company has continued to mine and stack throughout the winter months at planned rates. It now has approximately 1.25m t of ore stacked on the leach pad. The Company paused leaching and gold production in the first quarter of 2021 as cold weather made leaching conditions less favourable. This cold weather disruption will be remedied for the 2021/22 winter season with the installation of a boiler plant to hear process water nearing completion. The Company also wanted to conserve key chemicals and reagents for the upcoming warmer months given the COVID 19-related supply constraints. The Company plans to resume leaching and production in April 2021.
It is targeting annual production in 2021 and 2022 of between 50,000 to 60,000 oz and then a transition to the fresh rock ores in 2023. Production forecasts for 2021 are dependent on a restart of leaching in April 2021 and no further delays on procurement due to COVID 19.
The Company is now stacking ore on cell 3 of the leach pad. Stacking of the first level of the leach pad (Cells 1-5) will continue through 2021. Completion of the boiler house, used to warm the barren solution, is planned for Summer 2021.
In March 2021, the Company purchased a new Crusher through a loan from Capitron Bank. The new crusher will have a crushing capacity of 1,000t/hr, more than three times the current crusher, and it will fully support planned mining rates for the fresh rock phase where we have estimated throughput rates of 2-2.5m t.p.a. Construction of foundations and installation of the new crusher will start in early April and it is scheduled to be operational by July 2021.
In conjunction with the start of procurement of long lead items the Company continues discussions with Mongolian and international lenders on a multi-tranche project debt facility to finance the Phase 2 expansion, expected to include a grinding circuit, a leach/CIP plant, and a flotation circuit. Metallurgical testing is progressing well with encouraging results and the bankable feasibility study is on track for completion in summer 2021.
DRA Global has been retained for the Bankable Feasibility Study (“BFS”) and Base Metallurgical Laboratories has been retained to complete related metallurgical test work. The BFS is based on the updated resource announced in late February. A full 43-101 report will be filed shortly.
An upgraded power solution will be required for the fresh rock phase and a power study was completed in December 2020 with recommendations now being reviewed. The plan is to use a diesel genset solution initially for the fresh rock expansion as the Company executes on grid-based power options.
Steppe Gold Limited
Steppe Gold is Mongolia’s premier precious metals company.
For Further information, please contact:
Bataa Tumur-Ochir, CEO and President
Shangri-La office, Suite 1201, Olympic street
19A, Sukhbaatar District 1,
Ulaanbaatar 14241, Mongolia
Tel: +976 7732 1914
Cautionary Note Regarding Forward-Looking Statements:
The above contains forward-looking statements that are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in our forward-looking statements. Factors that could cause such differences include: changes in world commodity markets, equity markets, costs and supply of materials relevant to the mining industry, change in government and changes to regulations affecting the mining industry. Forward-looking statements in this release include, among other things, statements regarding the trading of the Common Shares and business, economic, and political conditions in Mongolia. Although we believe the expectations reflected in our forward-looking statements are reasonable, results may vary, and we cannot guarantee future results, levels of activity, performance or achievements. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release
