Transcript
Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
0:08 Hello everyone and welcome to Stepgold's live investment summit today, hosted by 6. I'm pleased to introduce our speakers for today, Bata Tumuroshu, President and CEO, and Anil Warich, Executive Vice President. They're joining us live from Mongolia to provide us with a 15-minute shareholder brief, and afterwards our presenters will be accepting questions.
0:28 As a reminder, you can submit your questions at any time using the Q&A panel found on the right hand side of your screen. As always the sum is being recorded and will be available to watch afterwards on six.com. Now without further ado I'll hand it over to Batat to kick things off. Okay thank you, thank you very much for having me and thank you everybody for joining us today. And so the latest updates would be, we announced we came back in full production March 1st. So starting from March we received the reagents and actually now we're receiving the fourth one. Just now, 2 hours ago, we just received another new batch of reagents to the country, and it took it to the ship to the site. And so far, we have,
1:16 on the leach bed, we have 33,000 ounces of gold, recoverable gold, and on the ramp we have 10,000 and 23,000 ounces of recoverable gold, and they blasted 81 and 4 pits. So as of March 31st, we do have 76,000 ounces of recoverable gold underground. So even though we had some reagent issues last year, we haven't stopped the mining, crushing, and bleaching. So now this year, we have enough material to complete the targeting 20,000 ounces this year. So so far, the production is going well, and so far it's good. Excellent. Thanks, Marta. So on the other updates here, I like to, obviously I'm here in country for the first time in 2.5 years, so it's great to be back in the country. Certainly a lot of things are happening here.
2:10 We've seen recent news obviously with further investment from majors around the world into Mongolia. We've been able to bring a few banking partners and analysts on site this last week, which has obviously been a big vote of confidence for people to make the trip over here in this time and get to see our site in action. Just a few days ago, everything was on site, was going at the same time. We're obviously sprinkling with cyanide. We're mining, we're crushing, we're stacking. So a lot's going on, and we're now back to 2 gold pours per month. March was our first month of production, April ending shortly. We'll have another gold pour later this week, and we look forward to updating the market, I guess probably later next week, early May, on operational updates, full operational updates for the month of April, confirming obviously the additional shipments of reagents to the goal pores and what those numbers, the high-level numbers look like as well. So we look forward to updating you further. But we're very happy to be here to have analysts on site to see you know more than pictures to meet the team both here in the in our head office here where I'm right now but also on site where we have you know about 225 people on site So very exciting time
3:33 as we re-ramp up and start up our operations on phase 1, continue our path on phase 2 and obviously as of an hour or so ago we released an expiration update. So the drilling from late last year, we received our results and this is obviously a big win for our company here being able to identify high-grade zinc discoveries.
4:01 Some are fairly shallow and obviously some are at depth. So that's open pitable and underground. When it comes to underground, grade matters and we certainly have shown that. And I think most importantly is we already announced in October of last year that we were building flotation plants to process zinc and lead and produce zinc and lead concentrates with precious metals content. And here we now have, I guess, uncovered quite some significant milestones, intercepts of zinc. These are quite significant, and that can be, I guess, value add to our already phase 2 infrastructure. So this is a big benefit to us. It'll increase our revenue and potentially even our mine life here. And we're already getting drill rigs back on site to continue drilling on all deposits. So quite exciting time for us with this update.
5:01 You know, other than that, I think, you know, we want to keep this brief in terms of updates. We are updating on a monthly basis in terms of operations, in terms of production and cash flow and announcements we produce. And that's continuing and we're very excited with having a big inventory buildup, but I think what's quite exciting is now being able to drill again and seeing the results that we have just put out. There's a lot of room for growth here,
5:26 as we always expected, and hopefully over the coming quarter We can continue to update the market on additional exploration, hope it's precious metals and base metals and all that leads to mine life extension and growth and revenue growth. So quite excited here. It's great to be back in country. And with that, I think we're okay to open up to questions.
5:56 So just to add on to that, in 2020, We were purely focusing on ATO production. And 2021, last year, we had some lockdowns and travel restrictions. So this year, we are planning to do aggressive exploration programs on both ATO, as Neil said, and plus also planning to commence production on UK. So we are planning everything in place right now so soon we were going to release more and more expression updates for the shuttles yeah that's that that is that's right about so besides ATO we're now gonna have expiration coming from our maiden license, maiden drilling from our UK license in the coming months. That's a big deal for us, as we funded from our own cash flow, having drill rigs on both of our properties turning and news to support that while we continue to update on production and cash flow and further phase 2 expansion.
6:51 So quite action packed year for Stepgold to be able to provide quite a lot of news flow and hopefully positive catalysts continuing throughout the year and I think more importantly continue to build up a balance sheet again and a balancing strength through our oxide mine where we have a significant amount of inventory that we're already processing.
7:12 Alright awesome thank you so much. So we do have some questions here So the first question here is the production cost for 1 ton of zinc would probably be the same as for 1 ounce of gold. Bata and I aren't the technical guys on the team so I don't know if we want to answer that question without checking with our team, but certainly we can get back to the gentleman who asked the question. Please reach out by email or if we can get a contact, we'll get back to you on that answer. We'll have to get that answer from our technical team to confirm what that would look like. Awesome. And another question. Is there any update from the government side in Mongolia?
8:01 Yeah, so in general, Mongolia is in the mining economy and mining country. So 90% it's actually over 90, 93% of all our exports last year were coming from the mining companies. So it's mostly copper and coal and gold. And just recently the government of Mongolia proposed a new law to the parliament and it's been approved to it. So what the fact is step gold is the government is encouraging gold producing companies to produce more and more gold. So government is now going to pay, the central bank is going to pay 5% premium on top of the spot price, gold price. So it's very encouraging and we're hoping too it's going to be effective next Monday. So government approved it, parliament approved it, so there is a little bit of time and hopefully starting from next Monday, the coal companies will receive 5% premium on top of the coal price.
8:58 So these are the positives. Also recently we also have re-attempted to propose to take over the TRQ shares and to encourage and shows how they want to work in more investment to Mongolia more. And just last week also we had saw the news about ZG Mining, Chinese company, investing to a copper company in Mongolia. So there are more and more foreign investments. Investment is coming to Mongolia and it's very encouraging for us. Awesome, thanks so much. Another question here. So what does the new Zinc Discovery mean for the already prepared for phase 2 expansions?
9:47 And does it change any other timelines as you commit to drilling this discovery in the next month?
9:53 Yeah so the new discovery is very important and very exciting. It hasn't changed our path for phase 2, bringing phase 2 online in about 2 years' time. And we already announced that we were building flotation plants to process these type of ores because zinc and lead already existed in ATO 1 and 2, and now it looks like we have more of it and quite a lot higher grade and that hopefully continues with new drilling. So it does change the amount of drilling we will probably do, which means we're going to do more. So, you know, we still are going to be drilling out extensions on all of our deposits and doing drilling there to optimize and grow the precious metals both in phase 1 and phase 2.
10:39 As a reminder, the Mung deposit is all precious metals, doesn't have base metals, And 90% of that, give or take, is not even included in this feasibility study for phase 2. So we're still going to continue to do MET test drilling and recovery work on Mung to bring Mung into the feasibility study for phase 2, which will grow our precious metals production. And then, of course, now we have more what looks like to be more material on the base metal side the zinc in the lead. Which we already knew we had and we already are building those plants so it is what it looks like you know at a high level today obviously there's more to follow up on. We're going to have more revenue and probably mine life at some point for this for this phase 2 mine. So it doesn't require any more capex. This is the beauty of all this is that this is already in place, was already happening, and now we're adding more to it. So it's a big win and a good start for the company on that side.
11:39 We don't know the full mix of what it'll look like by the time we bring production online for phase 2 of how much production will come from precious metals and how much will come from base metals, but certainly zinc is certainly hotter these days than it was before and base metal revenue growth without having to pay for it is fantastic win for the company.
12:02 Awesome, thanks so much. We have one more question here. There are many equipment needs for phase 2. Is the procurement of these goods guaranteed due to COVID? So what was the last part there? The procurement? Yeah, is it guaranteed or like what's the status of the procurement, right? Yeah, so I mean we're wrapping up obviously the finalities of phase 2. You know Some of that work has already been done. We already procured the crusher, for example. That's gonna be operational and fully installed, we think, by July this summer. So that's a phase 2 equipment and installation already being done today. But obviously there's some larger equipment, like the flotation plants that can come off the shelf right from China. The plan is to put deposits down later this summer on those major equipments that are needed with the goal of bringing them on site by early next year, I would say.
12:58 And next year is really the construction year for phase 2. So yes, we've started because obviously the question is they're paid for and being installed, but the larger flotation plants, obviously,
13:10 we'll put up deposits down and procure them later this summer with the goal of having them on site in about 6 months after that. We have a tailings facility design engineering and construction also being done by Knights Peacehold so that's continuing to that will continue to advance again there'll be more construction for next year but the the background work is being done today And so really the goal is for phase 2 procurement is wrap it all up by later this summer, expand the camp now, then summer this summer this year, you know continue on some earthworks and and whatnot and next year all the construction installation of the equipment. All right and I think we have time for one more question here. So from Jeff, what is the base case production profile in terms of gold ounces for phase 2?
14:01 Second, what is the assessed risk of further COVID shutdowns within Mongolia as the government moved on or still front and center? I'll answer the first part and Bhatta can comment on the second part related to the government in COVID. But the gold production on an equivalent basis so we're going to produce gold, silver, lead concentrate with precious metals and zinc concentrate but on a gold equivalent basis Our production profile will be about 105,000 ounces over the first 5 years in phase 2, and then drop down a bit, but average just about 100,000 ounces on a gold equivalent basis with all those commodities I just mentioned for phase 2. So that's about 2 years.
14:48 So really we're doubling our production profile on a gold equivalent basis over the next 2 years. And the goal is to keep extending that 10 and a half years that we have starting in 2 years. So in 2 years, We'll have 10 and a half years, about 100,000 ounces on the gold equipment basis of production. And it looks like that's gonna grow. That 10 and a half years could grow, but we could also potentially grow that production profile with minimal or hopefully no CapEx increase. We could still grow that production profile from 100,000 ounces to closer to 125 or 150, which is our goal. I'm happy to answer that. Oh, sorry, Bhatta, go ahead with the COVID question, and then I can answer the next question.
15:34 Yeah. So on the COVID side, last year was very difficult. We had the quarantine period from 7 to 14 days in each roster shift and so on. So it was difficult, but now this year, compared to last year, everything is open now. We can freely do the roster shift without any quarantine dates, and the travel restrictions are lifted up, so people are starting to come in. So this year is relatively much better, and it's getting even better. So the vaccination-wise, almost most of the people got their third shots of the vaccine and the mortality rate and so on, it's much lower to compare to previous years and compared to other countries. So, so far it's been doing good. And I think the government did a really good job. And also the company had phone quarantine station and we tried to follow every Recommendations came from the government and now it's fine. Everything's back on back on online. Yeah Yes, so with this shipment shipment from China the numbers of number of containers coming to Mongolia is increasing day by day. So hopefully by the end of summer, it will be back to normal as it used to be. Awesome.
17:00 And last question here. I think we got a little bit of time here. So are there fair value predictions for the share price? Well, I mean, I won't give you what my fair value is, but if you look at comps, obviously, you know, 50,000,100,000 ounce producers trade, you know, between $200 million to $1 billion in different jurisdictions. We have 2 analysts that have target prices over the next 12 months of $350. Steiffel GMP has a $350 target. Handelman Partners also has a $350 target. These are investment banks that cover our stock today. Actually just went to site, you know, those targets could change, but that's, you know, the most recent as of a month ago, that was their 12 month target.
17:46 My guess is as we continue to de-risk this restart up of phase 1 and continue to advance phase 2 and obviously continue to update expiration, those numbers can change and obviously to higher. But that's a good start, I guess, for now. As a reminder, we hit $3 in 2020 when we didn't have more than 2 million ounces we didn't have a feasibility study with 10.5 years more of mine life here we are today but it's a it's a Show me story and we're showing you that we're back in action and we're going to continue to update the market and And well, I think we'll hit those fair value targets and more. Just may take months or 0.25. We'll see Awesome, thanks so much And I think that's all the time we have for today. So I'd like to thank everyone who submitted questions, as well as Bata and Anil for their presentation.
18:39 If you didn't get a chance to get your questions answered or if you have any additional questions, feel free to reach out to the Stepgold team and they'll follow up with you directly. You can also find more information at stepgold.com. Thank you everyone. And any closing remarks? Listen, I want to thank everyone again for taking the time to hear a very quick update. We're very happy to be back in the country. We're seeing it's open. We've seen the buzz and the growth opportunities in country and we're very excited to continue to update the market on a continued basis. So what we offer as a summary is production, cash flow, expansion to double our production and still expiration and growth as we've just shown today, but on both our properties, all that can be funded from our cash flow from phase 1. So that's quite exciting.
19:30 You
