Steppe Gold Amends EPC Agreement for ATO Phase 2 Project
Steppe’s ATO Phase 2 EPC costs rise 60%, but a Triple Flag settlement clears the path for project execution.
Steppe Gold Ltd. (STGO) has amended its engineering, procurement, and construction (EPC) agreement with Hexagon Build Engineering LLC for the ATO Phase 2 project, increasing the contract value from US$148.8 million to approximately US$238.2 million. This adjustment represents an increase of roughly US$89.4 million, or 60%.
The expanded scope includes critical infrastructure components such as a tailings management facility, power and water transmission systems, concentrate transportation roads, and camp and maintenance facilities. Management intends to secure debt financing to cover the revised scope, though arrangements are not yet finalized and there is no assurance that financing will be obtained on acceptable terms or at all.
A revised feasibility study is expected in the second half of 2026 to reflect the increased annual throughput capacity. The project timeline remains contingent on the completion of the feasibility study, financing, permitting, and execution planning.
Steppe Gold Ltd. (STGO) faces a material headwind to Phase 2 margins and capital expenditure requirements due to an increase in engineering, procurement, and construction (EPC) costs. While this escalation represents a standard evolution in project development rather than a fundamental shift in the business model, it introduces near-term cost and execution risks.
On June 12, the company reached a settlement with Triple Flag, a move that removes certain overhangs and stream obligations. However, this development does not offset the challenges posed by the cost increases and financing uncertainty. The market has already reflected these cost concerns, with the stock declining from $1.40 following first-quarter earnings to $1.28.
Steppe Gold Ltd. (STGO) is a producing gold and silver miner operating in Mongolia. Its flagship assets include the Boroo Gold Mine, the Ulaanbulag Mine, and the ATO Project, which is currently in development as a Phase 2 expansion. The company is focused on maximizing cash flow from existing operations while funding the ATO Phase 2 expansion to increase throughput and mine life.