Steppe Gold Ltd (TSX: STGO) has revealed an updated life of mine (LOM) for the wholly-owned ATO Gold Project in Mongolia, comprising a further 1.5 years at the fresh rock expansion (Phase 2 Expansion), for a 12 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. The Phase 2 Expansion is scheduled to start with first concentrates in Q1 2025. The LOM plan includes the ongoing oxide operations which has a further three years to run, for a total of 14 years of mine life, from January 1, 2023.
Highlights
- Increase in proven and probable gold mineral reserves from the 2021 mineral reserve and resources summary by 2.7Mt, from 26.4Mt to 29.1Mt.
- The ATO Project deposit contains mineral reserves totalling 29.1Mt at 1.13g/t gold and 12.43g/t silver, containing 1.1Moz of gold and 11.7Moz of silver.
- This derives a total of 1,320,000oz Au Eq recovered, over oxide and fresh rock phases and a 14 year mine life.
- Fresh rock mine life is extended by 1.5 years to 12 years, extending open pit mining and milling operations to December 2036.
- The new pit model shows the fresh rock phase generating 1,237,000oz Au Eq recovered over 12 years, at average Au Eq oz of 103,000oz per annum, before payability adjustments.
- The update of reserves and resources have also reinterpreted the transition zone with the transitional layer now thinner than previously modelled.
- Total gross revenue over the next 14 years, including the balance of the oxide phase, of US$2.2B and operating cash flows after stream obligations, of US$781M, with first concentrate production from Phase 2 anticipated in Q1 2025.
- It assumes gross revenue in the remaining oxide phase of US$158M (US$1,900/oz gold price) from approximately 83,000 of recovered Au oz, expected to conclude in 2025.
- Average site AISC of US$915/gold equivalent ounce, with solid plans to optimize, notably with grid power and potential renewable power options.
- Initial capital expenditure and operating cost assumptions are largely unchanged. Initial capex for the Phase 2 Expansion, prior to optimizations, is expected to be US$128.5M with a US$12M contingency. Recent price inflation has largely been offset by positive currency effects.
- ATO Gold Project’s after-tax net present value (NPV) is estimated at US$242M at a 5% discount rate using a long term gold price of US$1,700/oz gold (US$1900/oz in the oxide phase), US$20/oz of silver, zinc price of US$2,500/t and lead price of US$1,970/t.
“We are delighted to share the updated life of mine plan for the ATO Mine Fresh Rock phase, which showcases its potential to recover 1.24Moz of gold equivalent over a 12-year mine life, at 103,000oz Au Eq per annum, through the Phase 2 expansion,” President and CEO, Bataa Tumur-Ochir, said.
“Our ongoing success in oxide production solidifies our belief in the ATO Mine’s expansion potential and strong economics, even under conservative metal prices.
“To further enhance the Phase 2 Expansion, we are working on connecting to grid power, reducing construction and engineering costs, and continuing exploration to support future resources.
“We are confident that the ATO Mine will provide significant value to all stakeholders, with an estimated total gross revenue of US$2.2B over the next 14 years, including the remaining oxide phase, and operating cash flows after stream obligations of US$768 million.
“The company is making steady progress towards producing the first concentrates from the Phase 2 Expansion in the first quarter of 2025.”
Executive Chairman, Matthew Wood, said this very exciting update supports our expectation that the ATO Project will show expansion potential with solid revenues and competitive costs.
“We believe we can improve on gold recovery overall and anticipate more positive results following the exciting high grade base metal showings at ATO and further work at the Mungu deposit,”
ATO Mine Mineral Reserves and Resources
As at August 27, 2022, the ATO gold deposit contains combined proven and probable mineral reserves totalling 29.Mt at 1.13g/t gold and 12.43g/t silver, containing 1.1Moz of gold and 11.7Moz of silver. The reserves have been classified as approximately 59% proven and 41% probable on a tonnage basis. The mineral reserve within the 2022 reserve pit shell was based on a AuEq cut-off grade of 0.43g/t AuEq for Fresh material and 0.40g/t AuEq for Oxide material and revenue of US$1,700/oz gold, US$20/oz silver, zinc price of US$2,500/t and lead price of US$1,970/t. as the price assumptions.
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