Steppe Gold Reports Strong Cash Flow in First Year of Production Pushing Ahead with Stage 2 Expansion

Steppe Gold Limited (TSX: STGO) ("Steppe Gold" or the "Company") is pleased to announce its financial results for the fourth quarter and year ended December 31, 2020.

The full version of the Condensed Interim Consolidated Financial Statements and Management's Discussion & Analysis can be viewed on the Company's website at www.steppegold.com or under the Company's profile on SEDAR at www.sedar.com. Amounts are expressed in United States dollars unless otherwise noted.

Steppe Gold President and CEO, Mr Bataa Tumur-Ochir commented, "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 environment audit.

Cash costs remain at market-low levels at $607 per ounce sold for the year and this allowed us to build up a solid cash balance, ending the year at $32.6m. Discussions with Mongolian and International lenders are progressing well and this supports our optimistic outlook for a timely debt financing for the Phase 2 expansion now underway.

We have now mined approximately 1.7m tonnes of ore and 1.25m tonnes stacked on the leach pad. With a new fixed 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 the ATO resource now at 2.45m oz Au Eq, and procurement of long lead capital items 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."

Year Ended December 31, 2020 Highlights (all figures in US$000s unless stated)

• Revenue for the year ended December 31, 2020 was $52,097 on sales of 31,733 gold ounces and 13,710 silver ounces with average realized prices per ounce of $1,822 and $20 respectively
• Operating income from mine operations, before depreciation and depletion, was $32,551
• Consolidated Group Adjusted EBITDA for the year was $24,399
• Year-end cash, restricted cash and savings accounts balance was $32,605; bank debt is $10,610
• Cash Costs for the year ended December 31, 2020 were $607 per ounce sold
• All in Sustaining Cost (AISC), before expensed exploration, for the year ended December 31, 2020 was $839 per ounce sold
• During the year ended December 31, 2020, 1,138,209 tonnes of ore were mined and 699,204 tonnes of ore stacked with an average gold grade of 2.03 g/t and an average silver grade of 8.88 g/t.
• The Company expects to pay minimal income tax in respect of the 2020 financial year due to COVID-19 pandemic related tax exemptions.
• The Company announced a resource update on February 24, 2021 for the ATO Gold Mine. This update shows a doubling of the resource to 2.45m oz Au Eq and now supports a planned production profile of approximately 150,000 gold equivalent ounces per year and an estimated ten-year plus mine life
• Work is well advanced on the Bankable Feasibility Study (BFS) for the Phase 2 expansion of the ATO Gold mine. Incorporating the recent resource update and a detailed series of new metallurgical work, the BFS is due for release in summer 2021.
• The Company completed an active period of drilling at ATO and Mungu in 2020, with drilling continuing into early December 2020. The focus was on extension and infill drilling and contributed to the resource upgrades on the existing ATO deposits and the maiden resource on the Mungu Discovery.

Fourth Quarter Highlights (all figures in US$000s unless stated)

• Revenue for the quarter was $13,217 on sales of 7,923 gold ounces and 3,429 silver ounces with average realized prices per ounce of $1,882 and $23 respectively
• Operating income from mine operations, before depreciation and depletion was $8,349
• Consolidated Group Adjusted EBITDA for the quarter was $5,553
• Cash Costs for the quarter were $604 per ounce of gold sold
• All in Sustaining Cost (AISC), before expensed exploration, for the quarter was $902 per ounce sold
• During the quarter, 291,455 tonnes of ore were mined and 206,703 tonnes of ore was stacked on the leach pad with an average gold grade of 2.26 g/t and an average silver grade of 9.22 g/t.

Details of Non-IFRS Performance Measures noted above can be found in the Company's Management's Discussion & Analysis.

Operational and Financial Summary

The ATO Gold Mine is the sole operating mining asset of the Company. Prior period comparables have been included where appropriate in relation to commercial production beginning in 2020.

(1) Grade is in respect of the gold grade of ore fed through the heap leach pad.
(2) Gold Recovery of 70% is based on the technical reports and is used to calculate inventories and cost of sales. Actual recoveries may vary

Outlook

The Company has continued to mine and stack throughout the winter months at planned rates. It now has approximately 1.25m t of ore stacked on the leach pad.

The Company paused leaching and gold production in the first quarter of 2021 as cold weather made leaching conditions less favourable. This cold weather disruption will be remedied for the 2021/22 winter season with the installation of a boiler plant to heat process water nearing completion. The Company also wanted to conserve key chemicals and reagents for the upcoming warmer months given the COVID 19-related supply constraints. The Company plans to resume leaching and production in April 2021.

It 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.

In March 2021, the Company purchased a new Crusher through a loan from Capitron Bank. The new crusher will have a crushing capacity of 1,000t/hr, more than three times the current crusher, and it will fully support planned mining rates for the fresh rock phase where we have estimated throughput rates of 2-2.5m t.p.a. Construction of foundations and installation of the new crusher will start in early April and it is scheduled to be operational by July 2021.

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 and the bankable feasibility study ("BFS") is on track for completion in summer 2021.

DRA Global has been retained for the BFS and Base Metallurgical Laboratories has been retained to complete related metallurgical test work. The BFS is based on the updated resource announced in late February. A full 43-101 report will be filed shortly.

An upgraded power solution will be required for the fresh rock phase and a power study was completed in December 2020 with recommendations now being reviewed. The plan is to use a diesel genset solution initially for the fresh rock expansion as the Company executes on grid-based power options.

Steppe Gold Limited

Steppe Gold is Mongolia's premier precious metals company.

For Further information, please contact:

Bataa Tumur-Ochir, CEO and President

Shangri-La office, Suite 1201, Olympic street
19A, Sukhbaatar District 1,
Ulaanbaatar 14241, Mongolia
Tel: +976 7732 1914

Cautionary Note Regarding Forward-Looking Statements:

The above contains forward-looking statements that are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in our forward-looking statements. Factors that could cause such differences include: changes in world commodity markets, equity markets, costs and supply of materials relevant to the mining industry, change in government and changes to regulations affecting the mining industry. Forward-looking statements in this release include, among other things, statements regarding the trading of the Common Shares and business, economic, and political conditions in Mongolia. Although we believe the expectations reflected in our forward-looking statements are reasonable, results may vary, and we cannot guarantee future results, levels of activity, performance or achievements. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release

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