Steppe Gold

Overview

Steppe Gold (TSX:STGO) is a precious metals development company and gold and silver producer in Mongolia. The company owns the Altan Tsaagan Ovoo (ATO) and the Uudam Khundii (UK) gold projects in Mongolia and the Tres Cruces gold project in Peru.

Steppe Gold commenced gold production in April 2020, at its flagship ATO Gold Mine. As of December 31, 2022, the company had mined 3.4 million tonnes, crushed and stacked 2.8 million tonnes @ 1.92 grams per ton (g/t) for approximately 173,958 ounces (oz) of gold on the leach pad and 498,000 tonnes of ore at an average grade of 0.79 g/t on the ROM pad. At an estimated 70 percent recovery, the total inventory from oxide ores is approximately 80,000 oz of recoverable gold inclusive of 16,000 oz in situ based on internal reserve estimates.

Operational progress at ATO Gold Mine

The 100-percent-owned flagship ATO Gold Mine’s Phase 2 expansion project has been updated to approximately 103,000 oz of gold per annum, with a 12-year mine life, for a total of 14 years to 2036 at AISC of ~US$850. Steppe signed a binding term sheet agreement with the Trade and Development Bank (TDB) of Mongolia to provide up to US$150 million in financing for the construction and completion of the Phase 2 Expansion at the ATO Gold Mine. Steppe anticipates the first concentrate production and sales from Phase 2 in 2025.

Existing defined fresh rock resources are expected to be supplemented by the new discovery of high-grade gold and silver mineralization on the Mungu trend. Steppe Gold’s exploration is showing that the high-grade Mungu discovery is semi-continuous to the structurally-controlled mineralization drilled at the ATO 4 deposit and that significant resource expansion is possible.

The UK gold project is the first-of-its-kind joint venture (80/20) between Steppe Gold and the Bayankhongor Provincial Government. The company has completed an initial exploration program on this project consisting of IP and magnetic surveys, as well as rock chip and soil geochemical programs. The program resulted in four discoveries that the company plans to further explore with an extensive program of trenching and drilling in the near term.

Steppe Gold is continuing to assess a number of additional opportunities to acquire exploration licenses and mining projects across Mongolia, led by a management team with a track record of success in the country. In March 2023, the Steppe team entered into a binding agreement with Anacortes Mining, to further the company’s growth strategy beyond Mongolia.

Steppe has since completed the acquisition of all of the issued and outstanding common shares of Anacortes anticipating more growth for the company with the development of the high-grade Tres Cruces oxide project in Peru, located approximately 10 kilometers from the Lagunas Norte mine. Tres Cruces boasts 424,000 contained ounces of gold in oxide material grading 1.37 g/t, one of the highest-grade gold oxide development deposits in the world.

Company Highlights

As of December 31, 2022, the company has mined 3.4 million tonnes (Mt), crushed and stacked 2.8 Mt @ 1.92 grams per ton (g/t) for approximately 173,958 ounces (oz) of gold on the leach pad and 498,000 tonnes of ore at an average grade of 0.79 g/t on the ROM pad.In 2022 alone, Steppe Gold produced 33,500 oz of gold, a 180-percent increase over 2021.A joint venture partnership is in place for the UK project with the Mongolian governmentManagement has a proven track record of success in Mongolia.

Key Projects

Mongolian Assets

The 5,493-hectare ATO gold-silver project is located in the Dornod province of eastern Mongolia. Steppe Gold’s mining license for the project is fully permitted for 30 years.

Steppe Gold commenced gold production at the ATO project in April 2020. As of December 31, 2022, the company has mined 3.4 Mt, crushed and stacked 2.8 Mt @ 1.92 g/t for approximately 173,958 oz of gold on the leach pad and 498,000 tonnes of ore at an average grade of 0.79 g/t on the ROM pad. At an estimated 70 percent recovery, the total inventory from oxide ores is approximately 80,000 oz of recoverable gold inclusive of 16,000 oz in situ, based on internal reserve estimates.

ATO Mine Mineral Reserves and Resource

As of August 27, 2022, the ATO gold deposit contains combined proven and probable mineral reserves totaling 29.1 million tonnes (Mt) at 1.13 g/t gold and 12.43 g/t silver, containing 1.1 million ounces of gold and 11.7 million ounces of silver. The reserves have been classified as approximately 59 percent proven and 41 percent probable on a tonnage basis. The mineral reserve within the 2022 reserve pit shell was based on a gold equivalent cut-off grade of 0.43 g/t gold equivalent for Fresh material and 0.40 g/t gold equivalent for oxide material and revenue of $1,700 per ounce gold, $20 per ounce of silver, zinc price of $2,500/t and lead price of $1,970/t. as the price assumptions.

Mineral Reserve Estimate, Effective August 27, 2022

Exploration

Centerra Gold (TSX:CG), the prior operator and owner of the ATO project, spent over US$25 million on exploration, including the completion of 67,000 meters of drilling and 28,421 meters of trenching. Since acquiring the property, Steppe Gold has completed an additional 20,000 meters of drilling.

ATO 4 & Mungu Discovery

The Mungu discovery is located northeast of the current resource from the ATO 4 deposit. The discovery is located on a 20-kilometer-long structurally controlled, north-trending, mid-sulfidation epithermal gold-silver system. Steppe Gold believes that the ATO 4 deposit may be semi-continuous to the mineralization at the Mungu discovery. The ATO 4 Deposit currently remains open along strike to the north and at depth.

Moving Forward

Now that the company has been in production for more than three years, Steppe Gold plans to turn its focus towards exploration at the ATO deposits and Mungu discovery. The company is also working towards releasing an updated feasibility study for the fresh rock project that is expected to include the Mungu discovery. Steppe Gold is also looking to complete the following activities at ATO:

Receive cyanide permit, begin leaching and pour first gold.Restart the exploration program at ATO and Mungu deposit.

UK Gold Project

The 14,397-hectare Uudam Khundii property consists of one exploration license and is located 800 kilometers southwest of Ulaanbaatar, Mongolia. The property is an 80/20 joint venture with the Provincial Government of Bayankhongor.

The property is located between Erdene Resource Development Corporation’s (TSX:ERD) Bayan Khundii gold discovery and Altan Nar epithermal gold deposits.

Steppe Gold has completed an initial exploration program on the property that included geological mapping, geochemical sampling and geophysical surveys. The company expects to commence its trenching and drill programs in the near term. Steppe Gold is also looking into expansion opportunities to further consolidate its footprint in the area.

To date, the company has completed:

1,940 line kilometer ground magnetic surveyA 12-line kilometer IP survey346 rock chip samples8,427 soil geochemical samples

A maiden program commenced in July 2022 with the drilling of 3,000 meters with assay results pending.

Management Team

Bataa Tumur-Ochir – Chairman and CEO

Bataa Tumur-Ochir is responsible for new business acquisitions, development, government and community relations and daily operations in Mongolia. He has strong relationships with all levels of government in Mongolia and was recently appointed independent advisor to the Ministry of Mining and Heavy Industry responsible for foreign investment and promotion.

He is currently a director at GCD Mongolia and CEO and executive director of ASX-listed Wolf Petroleum. Under his guidance, Wolf Petroleum was awarded the “Operator of the Year Award” from the Petroleum Authority of Mongolia, and today, Wolf Petroleum is recognized as the fastest-growing petroleum exploration company with the largest petroleum exploration acreage in Mongolia. He holds a bachelor’s degree in business administration and graduate certificates in international business and marketing from Australia and Singapore.

Tumur-Ochir is a founding director of Steppe Gold and he has led the company as CEO since December 2019. He is also now the largest shareholder of the Company, on a partially diluted basis.

Byambatseren Tsogbadrakh – President

Byambatseren Tsogbadrakh is a founding member of Steppe Gold. A Mongolian national, she has held progressively senior positions in the company over the last few years.

Aneel Waraich – Director and Executive VP

Aneel Waraich is the founder of ATMA Capital Markets and ATMACORP LTD. He is a financial service professional with progressive experience in asset management and corporate finance businesses. Waraich focuses primarily on advising public and private companies in the natural resource sector.

In previous roles at Goodman and Company Investment Counsel and Dundee Capital Markets, he worked as an analyst valuing private companies. Most recently he worked as an investment banker focusing on deal origination, going-public transactions and financings for both public and private companies in the resource and technology sectors. He completed his MBA from the Goodman Institute of Investment Management at the John Molson School of Business.

Jeremy South – Senior VP and CFO

Jeremy South has been a director of Steppe Gold since March 2017. He has over 33 years of experience in M&A, capital markets and private equity in Europe, North America and Australia, including senior positions in investment banking at Deutsche Bank, NatWest Markets and Deloitte. For 10 years, he was a Global Leader and Mining M&A Advisor at Deloitte.

Based in Beijing for four years, he advised leading Asian trading houses and financial investors on mining M&A, financing and strategy, and he has worked with some of Asia’s largest companies. He acted as chairman of Aldridge Minerals Inc. up until its recent sale to Trafigura Ventures. South is a chartered accountant and holds a Bachelor of Economics from Monash University (Australia). He holds the ICD.D designation as a graduate of the Institute of Corporate Directors.

Greg Wood – VP Operations

Gregory Wood is an Australian citizen and was appointed as Vice President of Operations of Steppe Gold LLC in 2016. He is responsible for all mining-related operations in Mongolia. Before joining Steppe, he held positions as director and non-executive chairman of Carajas Copper Company, operations manager of Harvest Minerals and as CEO of Black Star Petroleum. He has extensive experience in the oil and gas industry through his past family oil business and has completed the Petroleum Engineering for non-engineers programmer in Houston, Texas.

Wood was a systems accountant with over 12 years of extensive experience in financial reporting, financial analysis, developing key performance indicators and modeling of financial reports over several industries including transport, media and infrastructure. He held management positions at Asciano and Patrick Stevedores.

Enkhtuvshin Khishigsuren – VP Exploration

Enkhtuvshin Khishigsuren has over 30 years of Mongolian mineral exploration experience. He spent the first 10 to 12 years of his career at Central Geological Expedition doing regional geological mapping in various areas of Mongolia, followed by seven years as senior exploration manager on the exploration of precious metal in Mongolia for Harrods Minerals.

Since 2005, he has been running his own company, Erdenyn Erel, which provides exploration and consulting services to western exploration and mining companies. He is responsible for identifying targets and properties based on his knowledge and experience. His experience has resulted in the discovery of several prospective gold and copper deposits in Mongolia; such as the multimillion-ounce gold deposit Olon Ovoot, the Zuun mod molybdenum porphyry deposit and the Shand copper porphyry deposit. He holds a bachelor’s degree in geological exploration from Azerbaijan State University and a Master’s in geological science from Shimane University, Japan.

Matthew Wood – Non-executive Director

Matthew Wood is a mineral resource explorer and developer with over 25 years of global industry experience in mining and commodities investments. He has managed investment deals in diamonds, coal, energy, ferrous metals, base and precious metals, among other commodities.

His unique skills in technical and economic evaluation of resource opportunities have resulted in a record of nurturing resource deals from early-stage, to market listings and exit strategies for his investors.

He was formerly the founder and executive chairman of the Mongolian coal company, Hunnu Coal Limited. Hunnu Coal was IPO of the year for all sectors on the ASX in 2010, and its sale for approximately AU$500 million in 2011 to Banpu PCL was recognized as the Mines and Money 2012 Deal of the Year. Wood has founded and been involved in many other resource companies and investments over the years. He has extensive experience and many key relationships in Mongolia and was recently awarded the Order of the Polar Star, the highest state honor that can be awarded to a non-citizen of Mongolia. He has an Honors Degree in Geology from the University of New South Wales and a Graduate Certificate in Mineral Economics from the Western Australian School of Mines.

Patrick Michaels – Director

Patrick Michaels is the Chairman of Zuri-Invest AG and the Chairman of Asty Capital AG in Zurich, Switzerland. He has been involved in numerous financings of gold mines in North America, among others. He is a well-respected financial adviser and fund manager throughout Europe.

Michaels has extensive experience in the fields of mining finance, fund management and asset allocation. He has a background in law and economics and did his training in the areas of private banking and investment research at UBS in Zurich. Additionally, he attended post-graduate courses at the Colorado School of Mines in Golden, Colorado.

Dr. Zamba Batjargal – Director

Dr. Zamba Batjargal has over 35 years of experience working for the government in Mongolia, dealing with issues of environmental protection and climate change. He was the Minister of the Environment of Mongolia from 1990 to 1996 and Director General of the National Agency for Meteorology, Hydrology and Environmental Monitoring from 1996 to 2001. Dr. Batjargal has experience in working outside of Mongolia due to his engagement in international bi-and multilateral cooperation activities.

He was the Ambassador of Mongolia to Japan from 2001 to 2005. Between 2005 and 2011, he worked in New York as a Representative of the World Meteorological Organization (WMO) to the UN. Since 2014, he has served as an independent consultant on climate change and the development of green policy for public institutions and non-profit organizations. He was also an advisor at the Office of the President of the United Nations Environmental Assembly (UNEA) in Ulaanbaatar (2014 to 2016). He received his Ph.D. in physics and mathematics in 1978 from the Hydrometeorological State University, St.Petersburg, Russia.

Batukhuu Budnyam – Director

Batukhuu Budnyam is a successful entrepreneur and financial expert who has extensive experience in the banking and finance sectors in Mongolia. Until recently, Budnyam served as Advisor to Chinggis Khaan Bank. Prior to joining Chinggis Khaan Bank, he was Managing Director of Organic Solutions Mongolia LLC and previous to that, he was Managing Director of MFS Capital LLC. Budnyam is a Mongolian native and speaks fluent English, Russian and German. He has a Bachelor’s Degree in Economics from the National University of Mongolia.

Sereenen Jargalan – Director

Sereenen Jargalan has been a professor at the Mongolian University of Science and Technology since September 2003 and head of the Department of Mineral Exploration since 2011 where she teaches ore geology and metallogeny to bachelors, masters and doctorate students and supervises Ph.D. student research projects. She has a Ph.D. and Master’s in Earth Science from the Institute of Mineralogy, Petrology and Economic Geology at Tohoku University in Japan, focused on petrology of igneous rocks and a Bachelor of Mineral Exploration from the Mongolian Polytechnical University.

She completed postdoctoral work focused on the REE potential in Mongolia at the Mineral Resources Research Group, Institute for Geo-Resources and Environment and the National Institute of Advanced Industrial Science and Technology, Japan. She has co-authored or contributed to over 50 academic books, articles and other publications. She has been the recipient of numerous academic awards and honors in both Magnolia and Japan.

Steve Haggarty – Director

Steve Haggarty is the Managing Director of Haggarty Technical Services Corporation and a registered member of the Professional Engineers Ontario. He has over 35 years of industrial experience both on-site and at a corporate level, involving several precious metal and copper producers, with a background in project design, commissioning, start-up, metallurgy, process optimization, project management, reclamation and closure.

With a mining career spanning nearly four decades, Haggarty’s industry experience includes 24 years in operations and 14 years in corporate and EPCM-related roles. Most recently, he was Senior Director for the Metallurgy at Barrick Gold Corp. In this role, he was responsible for operational performance improvements, defining GeoMet models, processing strategy and risk mitigation. Haggarty has worked at multiple mine sites around the world, including as General Manager of Barrick Gold’s Veladero heap leach project in Argentina. He is considered a technical leader in heap leach processing, implementation and optimization.