Steppe Gold Ltd. (TSX:STGO) has significantly expanded its gold production capabilities in Mongolia, following the successful acquisition of Boroo Gold from Boroo Singapore. This strategic move, finalized on August 1, 2024, has not only increased Steppe Gold's annual production but also positioned it as a leading gold producer in the region. The Boroo Mine, now a cornerstone of Steppe Gold's operations, is expected to contribute between 65,000 to 70,000 ounces of gold annually, with a projected total output of 430,000 ounces by 2031. This acquisition is anticipated to elevate Steppe Gold's combined production to 80,000 to 85,000 ounces for both 2024 and 2025, marking a notable enhancement in the company's operational capacity.
The financial implications of this acquisition are substantial, with the Boroo Mine's Net Present Value (NPV) estimated at $260.1 million, based on a 7.5% discount rate and a gold price assumption of $2,300 per ounce. This valuation underscores the potential for significant upside, especially considering the current gold spot prices. By the third quarter of 2024, the Boroo mine had already produced approximately 57,244 ounces of gold, demonstrating its immediate impact on Steppe Gold's production figures.
In addition to the Boroo acquisition, Steppe Gold has streamlined its focus on Mongolian operations by selling its Tres Cruces Project to Boroo Singapore for approximately CAD$12.0 million. This transaction, also completed on August 1, 2024, provides Steppe Gold with additional liquidity, further bolstering its financial position. Meanwhile, the company's flagship ATO Gold Mine continues to perform robustly, with plans for expansion already underway. The Phase 2 production at the ATO project is set to begin in the first quarter of 2026, supported by a $150 million finance package. The expansion is expected to significantly increase the mine's value, with estimates suggesting an after-tax NPV5% of US$242 million and an Internal Rate of Return (IRR) of 67%.
Stonegate Capital Partners' analysis of Steppe Gold highlights the company's enhanced valuation, with estimates ranging from $0.47 to $0.81 per share. These developments underscore Steppe Gold's growing influence in Mongolia's gold mining sector, driven by strategic acquisitions and operational expansions. The company's focused approach to maximizing its Mongolian assets' potential is likely to draw increased investor interest, as it continues to capitalize on the lucrative opportunities within the gold mining industry.
