Orezone Announces Positive Preliminary Economic Assessment
OTTAWA, ONTARIO--(Marketwired - Jan 22, 2014) - Orezone Gold
Corporation (TSX:ORE) is pleased to announce the results of an
independent Preliminary Economic Assessment (the "Study") for its
wholly owned Bomboré Gold Project in Burkina Faso, West Africa. The
Base Case financial model yields a robust after tax IRR of 23.9 %
to Orezone with a mine plan optimized to deliver better grade in
early years, revenues using a $1250 gold price and current costs
based on operations in the region. The after tax IRR improves to
37.1 % from revenues at a $1,500 gold price, based on the same mine
plan. Orezone expects to complete detailed heap leach ("HL")
metallurgical and geotechnical studies in June, update the social
and environmental assessments by September and be in a position to
complete a full feasibility study and apply for a mining permit
before year end.
"The results of the Study are quite compelling and the project
benefits from size, location, low reagent consumption, rapid
leaching kinetics, low capital requirements and low all-in
operating costs," said Ron Little, CEO of Orezone. "Bomboré is one
of the largest and most advanced undeveloped deposits in the region
that is truly multi-phase. Commencing with a HL operation positions
the Company to move and grow rapidly with a carbon-in-leach ("CIL")
expansion if warranted under better capital market and gold price
conditions."
The Study was completed by G Mining Services Inc. of Montreal,
Canada ("G Mining") and included Kappes, Cassiday and Associates,
and Golder and Associates of Reno, Nevada. The NI 43-101 compliant
Study was based on the resource estimate prepared by SRK Consulting
("SRK") of Toronto and reported in Orezone's press release dated
April 29, 2013, which includes 139.9 Mt of M&I resources
grading 1.01 g/t for 4.6 Moz plus 18.4 Mt Inferred resources
grading 1.22 g/t for 0.7 Moz. The HL mineable resource is limited
to only the measured and indicated near-surface saprolite and
transition resources (average depth of 45 m) which includes 44.7 Mt
grading 0.88 g/t for 1.3 Moz. The sulphide resources, although
extensive, indicate relatively poor heap leach gold recoveries and
can be processed later under a CIL expansion scenario. G Mining did
not audit the SRK NI 43-101 resource.
Summary of Base Case Financials:
The Base Case assumptions include revenues using a gold price of
$1,250 and current prices for fuel, reagents, labor, mining and
other current costs from operations in the region as of Q32013. The
financial highlights are as follows:
|
Base Case Financials Description |
Heap Leach |
|
Mineral Resource used in Mine Plan (ounces) |
1,271,567 |
|
Average Grade (g/t) |
0.88 |
|
Processing Throughput (Mt/yr) |
5.5 |
|
Mine Life (years) |
8.1 |
|
Average Annual Production (ounces) |
123,000 |
|
Gold Production (ounces recovered) |
1,008,000 |
|
Waste to Ore Strip Ratio |
1.63 |
|
Gross Revenue ($M) |
$1,256.2 |
|
Direct Cash Cost ($/oz) |
$627 |
|
Operating Cost ($/oz) |
$677 |
|
Initial Capital ($M) |
$180.0 |
|
Sustaining Capital ($M) |
$53.8 |
|
Closure Costs ($M) |
$10.0 |
| Orezone (1) |
|
NPV after tax (0%) ($M) |
$246.6 |
|
NPV after tax (5%) ($M) |
$158.9 |
|
IRR after tax |
23.9% |
| Government (2) |
|
NPV (0%) with taxes ($M) |
$135.5 |
|
NPV (5%) with taxes ($M) |
$102.3 |
| (1) Represents Orezone's Burkina Faso
subsidiary cash flows net of royalties and local taxes. The
Government of Burkina Faso benefits from its 10% free-carried
shareholding, the gold royalty, corporate tax and withholding
taxes. |
| (2) Government cash flows are underestimated as
customs fees and duties on imports and indirect taxes built into
the delivered fuel price have not been incorporated. All figures in
USD.Exchange Rates: XOF : USD = 485 |
This Study constitutes a Preliminary Economic Assessment for NI
43-101 purposes, is considered preliminary in nature but
does not use
inferred resources. Mineral resources that are not mineral reserves
have not demonstrated economic viability.
Mineral Resources used in the Mine Plan
Final pits were designed to account for access ramps and
compatible pit slopes, which then produced the following total
diluted mineral resource to be used in the mine plan:
|
|
|
Measured Mineral Resource |
Indicated Mineral Resource |
Measured + Indicated |
|
|
Cut-off |
Tonnes |
Grade |
Contained |
Tonnes |
Grade |
Contained |
Tonnes |
Grade |
Contained |
|
Category |
g/t |
Mt |
g/t |
Ounces |
Mt |
g/t |
Ounces |
Mt |
g/t |
Ounces |
|
North: |
|
|
|
|
|
|
|
|
|
|
|
Laterite/Oxide |
0.33 |
12.70 |
0.89 |
365,500 |
8.35 |
0.83 |
222,500 |
21.06 |
0.87 |
588,000 |
|
Transitional |
0.32 |
5.37 |
0.91 |
157,500 |
1.08 |
1.11 |
38,000 |
6.45 |
0.94 |
195,500 |
|
Sub-total |
|
18.08 |
0.90 |
523,000 |
9.43 |
0.86 |
260,500 |
27.50 |
0.89 |
783,500 |
|
South: |
|
|
|
|
|
|
|
|
|
|
|
Laterite/Oxide |
0.32 |
8.33 |
0.85 |
227,000 |
2.81 |
0.87 |
78,000 |
11.13 |
0.85 |
305,500 |
|
Transitional |
0.31 |
4.30 |
0.87 |
120,500 |
0.70 |
1.07 |
24,000 |
5.01 |
0.90 |
144,500 |
|
Sub-total |
|
12.63 |
0.86 |
347,500 |
3.51 |
0.91 |
102,500 |
16.14 |
0.87 |
450,100 |
|
Southeast: |
|
|
|
|
|
|
|
|
|
|
|
Laterite/Oxide |
0.34 |
0.27 |
1.14 |
10,000 |
0.40 |
0.94 |
12,000 |
0.67 |
1.02 |
22,000 |
|
Transitional |
0.33 |
0.20 |
1.47 |
9,500 |
0.21 |
0.99 |
6,500 |
0.40 |
1.23 |
16,000 |
|
Sub-total |
|
0.47 |
1.28 |
19,500 |
0.61 |
0.96 |
18,500 |
1.08 |
1.10 |
38,000 |
|
Combined: |
|
|
|
|
|
|
|
|
|
|
|
Laterite/Oxide |
0.33 |
21.30 |
0.88 |
602,500 |
11.56 |
0.84 |
313,000 |
32.86 |
0.87 |
915,000 |
|
Transitional |
0.32 |
9.87 |
0.91 |
287,500 |
1.98 |
1.08 |
69,000 |
11.86 |
0.93 |
356,500 |
|
Total |
|
31.17 |
0.89 |
890,000 |
13.54 |
0.88 |
381,500 |
44.71 |
0.88 |
1,271,500 |
|
Note: |
Some
categories may not balance due to rounding |
Estimated Annual Gold Production for Base Case
The HL scenario assumes an average mining rate of 15 M tonnes
per year and a rate of ore placement on the leach pad of 5.5 M
tonnes per year. Gold production and operating costs for each year
are summarized as follows:
|
Year |
-1 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
Total |
|
Gold Prod'n (koz) |
3 |
125 |
128 |
131 |
120 |
121 |
123 |
119 |
119 |
19 |
1,008 |
|
Head Grade (g/t) |
0.83 |
0.94 |
0.91 |
0.93 |
0.85 |
0.87 |
0.88 |
0.85 |
0.85 |
0.83 |
0.88 |
|
| Summary of Operating Costs |
|
|
Heap Leach |
|
|
Total Costs |
Avg. Cost |
Avg. Cost |
|
Category |
$M |
$/t milled |
$/oz |
|
Mining |
276.6 |
6.25 |
275 |
|
Processing |
246.3 |
5.57 |
245 |
|
General Services |
101.8 |
2.30 |
101 |
|
Transport & Refining |
2.5 |
0.06 |
3 |
|
CSR |
3.1 |
0.07 |
3 |
|
Total (C1 Costs) |
$630.3 M |
$14.25 /t |
$627 /oz |
|
Royalties |
$50.3 |
$1.14 |
$50 |
|
Total (C2 Costs) |
$680.6 M |
$15.39 /t |
$677 /oz |
Initial Project Capital Cost Estimates
Initial capital costs were estimated on the basis of Q42013
quotes on equipment and databases for similar projects in West
Africa and South America adjusted for inflation.
|
Project Capital Area |
US$M |
|
Infrastructure |
11.1 |
|
Power |
5.4 |
|
Water |
4.5 |
|
Mining and Support Equipment |
32.3 |
|
Process Plant |
39.6 |
|
Indirects |
17.3 |
|
Resettlement |
5.6 |
|
General Services |
29.4 |
|
Pre-production |
12.8 |
|
Contingencies |
22.0 |
|
Total Capital Costs ($M) |
$180.0 M |
Total Capital includes a total contingency of $22M based on
rates that varied per item.
Sustaining Capital Cost Estimates
Sustaining capital costs were estimated on the basis of Q42013
quotes on equipment and databases for similar projects in West
Africa and South America adjusted for inflation. Taxes and freight
are included along with contingencies that are varied per item (20%
on leach pads).
|
Project Sustaining Capital Area |
US$M |
|
Mining and G&A |
8.6 |
|
Plant |
0.9 |
|
Leach Pads |
31.2 |
|
Resettlement |
5.5 |
|
Contingencies |
7.5 |
|
Total |
$53.8 M |
Project Sensitivities
The project is sensitive to gold price, and to a lesser extent
the fuel price, as demonstrated in the following table:
|
Gold Price (per oz) |
$1000 |
$1100 |
$1250 |
$1400 |
$1500 |
|
To Orezone |
|
|
|
|
|
|
NPV (0%) After tax ($M) |
85.3 |
151.2 |
246.6 |
344.3 |
399.8 |
|
NPV (5%) After tax ($M) |
27.1 |
82.1 |
158.9 |
236.5 |
280.4 |
|
IRR After tax |
8.2% |
14.9% |
23.9% |
32.4% |
37.1% |
|
|
|
|
|
|
|
|
To Gov't Burkina Faso |
|
|
|
|
|
|
NPV (0%) After tax ($M) |
46.2 |
80.6 |
135.5 |
188.2 |
232.9 |
|
NPV (5%) After tax ($M) |
36.4 |
60.4 |
102.3 |
143.2 |
178.3 |
|
|
|
|
|
|
|
Full details of the Preliminary Economic Assessment in the form
of a NI 43-101 technical report will be filed on SEDAR within the
next 45 days.
Development Timetable
Orezone has completed over 400,000 metres of drilling and much
of the full feasibility level technical studies required for a CIL
and HL operation. In order to finalize a HL full feasibility study
by year end additional metallurgical tests are required including
but not limited to column and compaction tests. Some geotechnical
follow-up on the new HL pad site location is also required. This
work is expected to be completed in Q2 2014. Social and
environmental studies will continue in parallel in order to prepare
an application for a mining permit based on the latest project
footprint and design.
Qualified Person
The Preliminary Economic Assessment was prepared by G Mining
under the supervision of Réjean Gourde, Richard Taylor of Kappes,
Cassiday and Associates, Todd Minard of Golder Associates Inc., and
Glen Cole of SRK Consulting Inc. whom are "qualified persons" under
the standards set forth in NI 43-101. [All four are independent of
Orezone for purposes of NI 43-101.] Dr. Pascal Marquis, Senior Vice
President Exploration, and Ron Little, President and CEO, are the
Company's designated Qualified Persons for the purposes of the
Study. All parties have reviewed and approved their respective
content of this press release.
Conference Call
Orezone will be hosting a conference call on Wednesday January
22, 2014 at 11:00 am EST where representatives from senior
management and G Mining will discuss the Study and be available to
respond to questions from analysts and investors. Those interested
in participating in the conference call should dial in at
1-800-743-4304
(Canada, USA) and an operator will direct participants to the
call.
About Orezone Gold Corporation
Orezone is a Canadian company with a gold discovery track record
of +12 Moz and recent mine development experience in Burkina Faso,
West Africa. The Company owns a 100% interest in Bomboré which is
situated 85 km east of the capital city, adjacent to an
international highway. Mineral resources are constrained within CIL
optimized open pit shells that span 11 km, and include 4.6 Moz of
measured and indicated (140 Mt @ 1.01 g/t) and 0.7 Moz of inferred
resources (18 Mt @ 1.22 g/t) with an average depth of drilling to
only 120 meters. The Company is continuing with various technical
studies in order to be in a position to complete a full feasibility
study and an application for a mining permit before year end.
Pascal Marquis, SVP Exploration and Ron Little, CEO are
Qualified Persons under National Instrument 43-101 have reviewed
the information in this release.
FORWARD-LOOKING STATEMENTS AND FORWARD-LOOKING INFORMATION:
This news release contains certain "forward-looking statements"
within the meaning of applicable Canadian securities laws.
Forward-looking statements and forward-looking information are
frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate",
"potential", "possible" and other similar words, or statements that
certain events or conditions "may", "will", "could", or "should"
occur. Forward-looking statements in this release include
statements regarding, among others; completing detailed HL
metallurgical and geotechnical studies for Bomboré in June 2014,
completing environmental and social studies for Bomboré in
September 2014, applying for a mining permit and completing a FS at
Bomboré by the end of 2014, and becoming a mid-tier gold
producer.
FORWARD-LOOKING STATEMENTS are based on certain assumptions,
the opinions and estimates of management at the date the statements
are made, and are subject to a variety of risks and uncertainties
and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking
statements. These factors include the inherent risks involved in
the exploration and development of mineral properties, the
uncertainties involved in interpreting drilling results and other
geological and geotechnical data, fluctuating metal prices, the
possibility of project cost overruns or unanticipated costs and
expenses, the ability of contracted parties (including laboratories
and drill companies to provide services as contracted);
uncertainties relating to the availability and costs of financing
needed in the future and other factors. The Company undertakes no
obligation to update forward-looking statements if circumstances or
management's estimates or opinions should change. The reader is
cautioned not to place undue reliance on forward-looking
statements. Comparisons between any resource model or estimates
with the subsequent drill results are preliminary in nature and
should not be relied upon as potential qualified changes to any
future resource updates or estimates.
Readers are advised that National Instrument 43-101 of the
Canadian Securities Administrators requires that each category of
mineral reserves and mineral resources be reported separately.
Readers should refer to the annual information form of Orezone for
the year ended December 31, 2012 and other continuous disclosure
documents filed by Orezone since January 1, 2013 available at
www.sedar.com, for this detailed information, which is subject to
the qualifications and notes set forth therein.
Orezone Gold CorporationRon LittleCEO(613) 241-3699 or Toll
Free: (888) 673-0663rlittle@orezone.comOrezone Gold
CorporationPascal MarquisS.V.P. Exploration(613) 241-3699 or Toll
Free: (888) 673-0663pmarquis@orezone.comwww.orezone.com
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