Steppe Gold signs US$150M term sheet to fund ATO mine expansion in Mongolia

Steppe Gold (TSX: STGO; US-OTC: STPGF) has signed a binding term sheet to provide up to US$150 million in financing to fully fund a second-phase expansion at its ATO (Altan Tsagaan Ovoo) gold mine in Dornod, northeast Mongolia. 

The first phase of production began in 2020 and has already produced over 78,000 oz. of gold to date by heap leaching. A further 83,000 oz. is to be recovered before phase two begins in fresh rock. The second phase will recover 103,000 oz. of gold-equivalent in each of 12 years.

The ATO expansion project has a post-tax net present value of US$242 million. The capex is pegged at US$128 million, but the expanded operation will result in total gross revenues of US$2.2 billion.

“We are very pleased to have reached agreement on a competitive lending package in a very difficult market for mine development financing,” said Jeremy South, senior VP and chief financial officer, in a release. “It underscores the strong fundamentals of the ATO Gold Mine and it represents a strong vote of confidence in Mongolia and in the Steppe Gold team. Importantly, it builds in flexibility in debt service and aligns the repayment schedule with the project cash flows, as well as limiting dilution in tough equity markets.”

Proven and probable reserves are 29.1 million tonnes grading 1.13 grams gold per tonne and 12.43 grams silver, containing 1.1 million oz. of gold and 11.7 million oz. of silver. A total of 1.3 million oz. gold-equivalent will be recovered over the life of the ATO second phase project.

Steppe says recent drilling has discovered multiple high-grade zinc sulphide intercepts beneath the existing ATO gold deposits. Assays were as high as 10.56% zinc and 3.13% lead over 21 metres. Even the lowest assays – 4.23% zinc and 1.83% lead over 55.4 metres – indicate potential.

The company also completed the acquisition of Anacortes Mining for its Tres Cruces gold project in Peru in late June.