Steppe Gold (Steppe), which operates the Altan Tsagaan Ovoo [ATO] and Boroo mines in Mongolia, has released its Q2 results with gold sold of 15koz, (H&Pe 21.1koz) with 13koz produced. Gold sold at Boroo was 14koz (H&Pe 17koz) with gold sold at ATO of 1koz (H&Pe 4koz). Operations at ATO were below plan as work focused on the operational readiness of the new crushing plant.
Site All in Sustaining Costs for the period were US$1,342/oz compared to US$844/oz during Q1 with the increase due to higher sustaining capex associated with fleet renewal at Boroo. Revenues for Q2 were US$32.3m with an average received price of US$2,147/oz with the ounces from Boroo being impacted by a US$2,000/oz hedge. Lower production drove a miss versus our expectation at US$US$17.9m vs US$32m. Production from ATO was unhedged.
Steppe Gold note that the hedge expired at the end of June and ounces produced in H2 should be fully exposed to higher spot prices. Key catalysts for the shares should be operational delivery, maintaining the development timeline for the ATO Phase II project, and exploration to extend the mine life at Boroo which we currently model closing in 2031. Our valuation is C$3.27/share, offering 142% upside.
Expect 2025 production of 64koz at US$1,278/oz: For 2025, Steppe has only given guidance for group production to be over 70koz, with no granularity on costs or production profile between the properties. We expect production of 4koz from residual oxide operations at ATO at an AISC of US$1,763/oz and 60koz from Boroo at an AISC of US$1,238/oz.
We have trimmed our expectations for ATO from 9.8koz previously and we trim our expectation at Boroo from 70koz. The combined operations mined 557kt of ore in Q2 with 463kt processed at an average grade of 0.94g/t and with a further 21kt leached at an average grade of 0.25g/t.
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