Steppe is procuring a $50m term loan from the Trade and Development Bank of Mongolia (TDB), a Senior Secured Credit Facility for $50m, a Senior Secured Gold Linked loan for $50m, to fund the Phase 2 expansion at the ATO Gold Mine
Steppe Gold to fund ATO Gold mine expansion. (Credit: Kefentse Molotsane on Unsplash)
Mongolia-based precious metals company Steppe Gold has signed a binding term sheet to fund the construction of the Phase 2 expansion at the ATO Gold Mine in Dornod, northeast Mongolia.
Under the terms of the financing, the company will provide a total of $150m, in three tranches of $50m each, in line with the planned construction phase of the Phase 2 Expansion.
Steppe is procuring a $50m term loan from the Trade and Development Bank of Mongolia (TDB), for a term of four years at an interest rate of 13.4% with flexible prepayment conditions.
The company is also procuring Senior Secured Credit Facility for $50m, which comprises a senior secured non-revolving amortizing loan of 60 months, at an Interest rate of 12% per annum.
In addition, Steppe is receiving a Senior Secured Gold Linked loan for $50m with fixed repayment terms, subject to market conditions and equity markets.
The secured financing will boost employment and investment during the upcoming construction phase and sustain these benefits until at least 2036, said the precious metals company.
Steppe Gold chairman and CEO Bataa Tumur-Ochir said: “This is a significant milestone for Steppe Gold and secures the future of the ATO Gold mine for the next 14 years.
“It has been a challenging yet rewarding 5 years since we listed on the TSX, and the company has been working towards unlocking the full potential of the ATO Gold Mine through the Phase 2 expansion.
“Most importantly, it allows the Company to move forward with all our stakeholders in Mongolia with a long-term and sustainable project in the region, with secure employment opportunities and positive economic outcomes.”
The Altan Tsagaan Ovoo (ATO) gold and silver project is located in the territory of Tsagaan Ovoo soum of Dornod province in eastern Mongolia.
The first phase of the Oxide Project at ATO gold mine was started in 2020, producing more than 78,000oz of gold to date by heap leaching.
Steppe estimates the second phase expansion to produce around 100,000 ounces of gold equivalent per annum from the fresh rock ore.
Steppe Gold senior vice president and chief financial officer Jeremy South said: “We are very pleased to have reached an agreement on a competitive lending package in a very difficult market for mine development financing.
“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.”
Last month, Steppe completed the acquisition of Anacortes Mining, a Canada-based provider of exploration and mining services.