DRA Global has been retained by Steppe Gold to lead the preparation of the Bankable Feasibility Study (FS) for Phase 2 of the Altan Tsagaan Ovoo (ATO) gold and silver project in the territory of Tsagaan Ovoo soum, Dornod province of Eastern Mongolia. The Phase 2 fresh rock expansion targets annual production of 150,000 oz gold equivalent, at the 100%-owned ATO Gold Mine project. Work on the Phase 2 FS is expected to be completed in summer 2021. DRA was initially engaged by Steppe Gold for a final review of their Phase 1 (oxide ore leaching) technical report, and subsequently for an earlier study stage of Phase 2. Base Metallurgical Laboratories has been retained to complete related metallurgical test work.
In late March, Steppe Gold President and CEO, Bataa Tumur-Ochir gave some updates on project progress so far. “We are very pleased to report a strong start to production at the ATO Gold Mine with operating cash flow from mine operations in 2020 of $32.6m, on revenue of $52.1m, in an approximate 9 months of production. Most importantly we are proud to report a zero accident safety record at the project, and our exemplary environmental record has been recognised with a 93% result on the latest government environment audit. Cash costs remain at market-low levels at $607 per ounce for the year and this allowed us to build up a solid cash balance, ending the year at $32.6 million. Discussions with Mongolian and International lenders support our optimistic outlook for debt financing for Phase 2.”
He added: “We now have approximately 1.7 Mt of ore mined and 1.25 Mt stacked on Cells 1 and 2 and, with a new crusher in place this summer, we are planning a record year for stacking in 2021. We have paused production in the first quarter with extreme cold weather conditions and we expect to resume production shortly. We have seen some bottleneck in supply of critical reagents and this will impact second quarter production as we conserve supplies for the important summer months. Hopefully this issue is temporary and will be resolved shortly. With our resource now at 2.45m oz Au Eq, and procurement of long lead capital items now underway, we are focused on increasing our production run rate from the oxide phase through 2021 and 2022 and executing the Phase 2 expansion which has already begun.”
The company has now commenced procurement of major capital items for the Phase 2 expansion. The first major purchase is a new crushing plant. The new crusher will have a crushing capacity of 1,000 t/h, more than three times the current crusher capacity, and it will fully support planned mining rates for the fresh rock phase where we have estimated throughput rates of 2-2.5 Mt/y Construction of foundations and installation of the new crusher started in early April and it is scheduled to be operational by July 2021. The new crushing unit comprises two primary jaw crushers and a cone crushing circuit. Sourced from a leading international supplier, the crushing plant will cost around $5 million in total, inclusive of civil construction work, installation and testing. The crushing plant purchase is being partly financed by a $2.9 million loan from a leading Mongolian commercial bank.
In conjunction with the start of procurement of long lead items the company continues discussions with Mongolian and international lenders on a multi-tranche project debt facility to finance the Phase 2 expansion, expected to include a grinding circuit, a leach/CIP plant, and a flotation circuit. Metallurgical testing is progressing well with encouraging results.
Steppe Gold is targeting annual production in 2021 and 2022 of between 50,000 to 60,000 oz and then a transition to the fresh rock ores in 2023. Production forecasts for 2021 are dependent on a restart of leaching in April 2021 and no further delays on procurement due to COVID-19. The company is now stacking ore on cell 3 of the leach pad. Stacking of the first level of the leach pad (Cells 1-5) will continue through 2021. Completion of the boiler house, used to warm the barren solution, is planned for summer 2021.
