Aneel is a plan man! DT

I’ve been following Steppe gold since they made it into production a few years back, but initially just started with a position trade in it from late 2021 to spring of 2022 for a 40%+. I got more intrigued with it in later 2022 and established a new position in it again in late November during tax loss selling silly season, but the position is now underwater by 21%.

My personal interest in it is that they fall into the “holy grail” category of a growth-oriented gold producer that can meaningfully increase production over the next few years from 40,000 to 100,000 and then to 200,000 ounces, and they have considerable exploration upside at all 3 projects.

Other “holy grail” style gold producers with large production growth and big exploration upside that I’ve discussed in the past in my portfolio are Karora Resources, I-80 Gold Corp, Calibre Mining, Minera Alamos, Thor Exploration, Mako Mining, Argonaut Gold, Equinox Gold. We’ll see how it goes, but maybe Lion One will fit into that same category over time, as they have the potential to increase their mill size and production output once they go into production over the next year, and also have plenty of exploration upside like the others, but I want to see them get escape velocity first as they go from trial mining into commercial production by next year.

Those are some of the holy grail gold producers I hold personally (I also hold other gold producers, that aren’t really in the same bucket like Orezone, Jaguar, and Galiano; but for more of a rerating higher in them and optionality to gold prices). There are other growth-oriented gold producers with big exploration upside that also look compelling that I’ve been considering…. Alamos Gold is a larger cap company, but still fits the description. Cerrado Gold is another with big growth plans organically within their own development pipeline. Golconda Gold is another, with a few projects and larger production growth 2+ years out. Aris Mining is somewhat in that category, but they’ve been mostly growing through acquisition, over organic growth, but they still have some of that in the mix as well.

Regardless, I realize Mongolia and Peru are more challenging jurisdictions to work in, but so far the team at Steppe Gold seems to have good working relationships in Mongolia with local communities and the government, and I’m curious to see how that translates over to how they will work in South America in a different jurisdiction. While I consider those jurisdictions higher risk, the massive discount in valuation for a company with just under 5 million ounces of gold, a 40,000 ounce production profile moving towards 100,000+ in 2 years, and a market cap of just CAD $70 Million is quite compelling to me and worth taking the additional jurisdiction risk as it is way more than priced in at this point. There are drill plays with no resources proven up yet (much less generating production revenues) that are trading at many multiples of this stock, and single asset producers that don’t have such a compelling growth profile also trading at much higher valuations.

A rerating higher in this over the next 2-3 years as they execute on Phase 2 sulfide production expansion at the ATO Mine is the primary mover. However, as Aneel mentioned the possibility of finding more ore at surface in other small pits to extend Phase 1 oxide production is another potential value driver. Hitting big and expanding the UK Project would be more bluesky upside. However, now that they are nearly done acquiring Anacortes Mining (any day now) and potentially developing the Tres Cruces’ project with Phase 1 oxide in maybe 2-3 years, would essentially double the production again, and be enough to substantially move the needle, even if gold prices flatlined here the whole time (which is not my expectation… because I expect significantly higher prices in the yellow metal in 2 years).

Yes, it is a logical and well-reasoned “plan” as you both noted. Sure… not without risk, but few things that could be substantially revalued higher are without associated risk.

Currently it’s a small bet I’ve made with Steppe Gold, but I’m considering raising my allocation to it to a medium-sized position weighting, which would improve my cost basis, and give me a more meaningful exposure to the potential journey it could go over the next few years.

This is not investment advice or pumping. I’m simply sharing my investing thesis in STGO as a seemingly unloved and overlooked gold producer with big growth plans and they should have a fair bit of drilling going on over the next few years. If their plan doesn’t work out, then I’ll take appropriate action, but it is going to take 2 years to know how it goes. In the meantime the 5 million ounces of gold should offer some upside optionality as well. I’m willing to sit in this one for more of a long-dated value investing trade and see how it goes by 2025 and 2026, providing something substantial doesn’t change in the interim.

🙂

As long as Matthew isn’t buying Florida Real Estate, I wouldn’t be too concerned. DT

Larry, I couldn’t be more confident about IPT and have been a buyer almost every day lately. It’s in better financial shape now than when it traded at 1.25 a few years ago. In my opinion it’s like January 2016 again in terms of risk-reward.
https://stockcharts.com/h-sc/ui?s=IPT.V&p=D&yr=1&mn=4&dy=0&id=p41660966183&a=1330444786