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Orezone Gold

View Company Profile

September 17, 2024 at 1:40 PM (MDT)|Broadmoor Hotel & Resort

Kevin MacKenzie

VP, Corporate Development & IR

Mr. MacKenzie has over 15 years of capital markets and industry experience. Prior to joining Orezone, Mr. MacKenzie held the position of Managing Director, Metals & Mining Equity Analyst at Canaccord Genuity. His industry experience spans all project levels, from early-stage exploration through to operations. This included positions as Project Geologist, Development Mine Manager, and Construction Technical Advisor with Imperial Metals at the Red Chris mine.

Mr. MacKenzie holds a degree in Earth and Environmental Sciences (Hon.) from the University of British Columbia, and an MBA, with a Finance specialization, from Queen’s University. He is a registered P.Geo. with the province of British Columbia.

This is an automatically generated transcript. Denver Gold Group cannot accept responsibility for mistakes, errors, omissions, or any action taken in reliance thereon. Use of this transcript is governed by Denver Gold Group’s Terms of Use.

For the introduction. And good afternoon, everyone. pleased to be up here today to walk you through the or zone story and our flagship Bombi Gold project located in Central Burkina Faso. This first slide here does a really good job at summarizing what we've achieved on the project today and and really what the pathway forward it is. So on the left hand side of the slide here, we achieved commercial production on the bomb boi oxide component of the project in late 2022 this was done on time and under budget and this provides us with a production center of over 100,000 ounces a year. Nameplate capacity of this mill was 5.2 million tons per annum. And we've been able to successfully optimize that to 5.9. Looking to the center of the slide there. This is the growth project that's now underway at bam bore. It's the stage one hard rock expansion which will push the production profile up over 100 and 70,000 ounces a year. There is a subsequent stage two that will happen in a few years thereafter, which will see that production grow overall to 225 to 250,000 ounces. But with regards to stage one, which we're tackling now, the project financing has been secured. Construction has commenced and first gold is expected late 2025. And the third leg to the story is, is really the significant exploration upside of Bambora. Bambora is a very loudly extensive system that's been drilled off us to date 5 million ounce resource base, 2.4 million ounce reserve base. So it's very, very shallow over a long strike length. So the opportunity for us in the coming years is to really drill it down at depth and see if we can materially expand the mental inventory. And we'll look at a few slides here shortly on that. So just a 2023 overview and the outlook for 2024. So again, the Oxide plant came online on time under budget, we achieved our first year production and cost guidance. That was 100 and 41,000 ounces at 1127 all in sustaining costs. And we didn't have an LT I in that year and that's a record that still holds today. One that we're very, very proud of when you look at those three check marks there, there's, there's really very few single asset start ups in recent history that can claim those, those check marks and while we had a lot of success out of the gate up on board, we did have a few setbacks which did take the wind out of our sales. First of which was when we were ramping up the project. Our power purchase provider defaulted on the contract that we had with them as a result, we had to run a much higher cost diesel for the year and we had to build a $19 million power line. So, you know, for a group who was coming out of the gates did everything right. That really set us back in terms of the, the opex and the Capex that we weren't expecting to spend during that year and that had a knock on impact. We were originally looking to do a single stage hard rock expansion to ramp rate up to 225 250,000 ounces. But as a result of that power setback, we ended up having to rook at that hard rock expansion, break it up into two stages. And through the first six months of this year, we had to go back and re scope that. So as gold was running, we couldn't come out to the market, really tell him what we were doing, what the project was going to look like and how we were going to be able to finance that. But as we sit here today, I'm pleased to report that's all bedded. Down now, We're well positioned to achieve our 2024 guidance. The power lines installed receiving over 95% power availability. The hard rock stage one is fully financed and underway and, and we're finally back to doing exploration, drilling on the property just to underscore again how successful the first six quarters of production were at bam bore. What we've done here with this slide is we've just averaged and annualized relative to the pure comparables. You could see the blue dot there, that's the last six quarters. If we look at the range of roughly 100,000 to 100 and 50,000 ounces on the X axis, you can see that bomb was towards the upper end of that immediate peer group in terms of production at the bottom end, in terms of all and sustaining cost. When we look to the stage one hard rock expansion, we'll be pushing to the right in terms of production, that'll get us up to 100 and 75 to 100 and 80,000 ounces a year. And again, that stage two that will happen thereafter, will push us right to the right hand side of that graph. Again, 225 250,000 ounces. So this will be a material project in West Africa. Now, we've done this exact same slide looking at some of the North American peers and, and really what you can see here is the the low overall cost nature associated with the Babo project and the overall trajectory as we continue to ramp that up relative to some of the the more well known names in in North America. So three year production forecast here guidance for this year is 100 and 10 to 100 and 25,000 ounces all in sustaining costs 1300 to 1375 next year will be a very comparable year with 2026 seeing that sharp jump up in the the overall production profile. With that being the first full year of the hard rock expansion company's focus at that point in time will be to deleverage the balance sheet and, and really to build a strong treasury, we wanna make stage two a capital allocation decision, not the next financing that that or zone has to tackle. We think that if commodity prices remain robust, that we could perhaps just roll right into that in 2026. But we'll see here in the coming year and a half where that stands quick overview of the hard rock expansion. Looking in the background there, you see the gray circuit, that's the existing oxide plant that's now operating in the foreground, everything in color there. That's the stage one hard rock expansion Capex $85 million all the long lead items have been ordered and that's really set the schedule for first gold from this circuit in late 2025. As we look to stage two, all we're really doing is adding additional components to this. Stage one, there'll be a few additional C I tanks, some thickeners and a ball mill among a few other things. So it's not a brand new circuit at stage two. It's just building out. Stage one. One of the big keys to our success in country has been really our commitment to local content. When we look at our local workforce force, 97% is is local Burkeen Abbey in Burkina faso, there have been 16 mines developed. So there's really just a wealth of, of knowledge and skills when it comes to to mining. we only have four foreign expats on the property and we see the opportunity to reduce that as the the project matures further or was the first to use an in country mining contractor. We worked with a local group and developed that skill set in country and are pleased to report that this group is now working with two other major mining companies in country on the right hand side. We've got two local financial partners which are both based out of Burkina Faso Course Bank. It's one of the, the biggest banks in West Africa. They're our, our senior lender and Neo Resources, which is a Burkina Faso based investment group currently hold 19.99% of or zones equity. So everything from our financial partners to our contractors to our workforce is, is all local. And that's given us a tremendous amount of support operating in the local communities as well as with the government now, just to quickly get into the, the exploration upside Abo Bo and something that we're actively tackling, looking at the, the top panel there, that's a plan map. So we're looking down at the system from the northern end or the left side of the, the panel all the way to the right hand side. That is a 14 Komer long strike line. So it's a, it's a very extensive mineralized system when you tip it up on its side and you can see that that lower panel there, it's a long section. You can see it was drilled very, very shallowly looking at some of the statistics on the left. The current mineral reserve base is 2.4 million ounces with the average pit depth at Baia only being 38 m so very, very shallow. We drilled over 7000 exploration holes on the property only 38 go down below 250 m and 14 below 300. The real reason why this was drilled so shallowly over the years was the previous management team, we were looking at this as an oxide heap leach scope. So the vast majority of this drilling drilled through the oxides. Once they hit the fresh or the sulfides, then they stopped and they moved out laterally. And that's left us with this great opportunity. Now, where we've got this huge reserve defined system. And now we really need to figure out where the center of mass is now just to provide a bit of context as to really how big and extensive this system is. What we've done is we've taken the reserves here. You can see them, those gray pits along surface and we've just layered over top. The Great Bear long section. A very topical more recent exploration discovery in Red Lake Ontario done in 2018, 2019 by Great Bear resources. This was a, a long geochemical anomaly that they had was 12 kilometers long. They focused into some fantastic structure, geology on the heart of the system. That's the LP central zone that you can see there strikes roughly 2 to 2.5 kilometers and they traced that mineralization down over 500 m. Subsequently sold that to Kinross who late or early last week rather put out a maiden pa on the project where they, they show that they've now traced that resource down to over 1.5 kilometers with some drill holes even hitting high grade minimization. Well below that. So all we're really trying to highlight with this slide is we've got a very robust orogenic system. And we've got a lot of real estate here to try and really figure out where the center of mass is at. Boria, it's something that we actively be focused on in the years to come. We're currently drilling at mega, that's at the far left hand side of the reserves there that you see as we zoom in on it here, it's actually a kilometer and a half strike length. So a very big system in on its own. You can see the density of drilling here that defines the reserve pit by that blue pit outline. As you go through that you get into the resources that density of drilling drops off and below the resources. A number of high grade intercepts. So one of the things that, that we could have done was gone here and done that conversion drilling and bumped this, this overall reserve up to 5 million ounces. But really what we want to show is proof of concept. So the drilling that's now underway with one rig and we'll add another one here shortly is testing that 250 to 350 m panel really to illustrate the continuity of mineralization and of this broader system and we'll continue along that 14 kilometers and then come back and do some some wider space even deeper drilling. Yet the whole focus longer term here is to illustrate that these pits can get pulled down at depth. But beyond that, within this, this broad or genetic system, there's a number of high grade sub zones, which we think much like our neighbors in the Southwest African resources who have an underground component to their operation, that could exist up on bore. So as we're doing the, the advanced grade control and the grade control drilling right now in the pits, we're starting to resolve the, the fold noses here and understand the plunges of mineralization much more and are getting intercepts of up to 100 g per ton over 8 m. So we think longer term, that'll be a narrative that develops at Boria as well current position. So this slide is just an overview of where we sit relative to the global peer comparables. On the left hand side here, we're highlighting the midpoint of 2024 guidance, the blue column on, on the right there. The dark blue is the midpoint of our guidance 117,000 ounces. When we bring the hard rock expansion stage one online, we'll be pushing 175 180,000 ounces. So that's that left dark blue column. And then with stage two pushing rate to the left hand side, where we've got a lot of room to make up here is on the valuation. And we think now that we've got the the oxide bedded down the power solution in place and stage one now finance and underway that. So we'll hopefully build some momentum here with the drill rigs also turning quick outlook on the financial position. So as we sit here, we got have 59 million in cash, 71 million in senior debt. Again, that's with Corus Bank at some very attractive rates and we've got a $35 million convert conversion price for that is a dollar 08 us. So that, that is out of the money when we fast forward to the end of 2025 when we've done and completed the stage one hard rock expansion, we have roughly $80 million in senior debt outstanding. And the current conservative outlook here is will be debt free in 2027 with the senior debt and convert repaid. And if the commodity prices remain robust, we could potentially pull that back into 2026. And just last, I'll leave you with the, the capital structure and research coverage. Neou at 20% RCF at 15 and Equinox out of New York at 9% are among our biggest shareholders and we've got a number of analysts covering us, so I'll leave it there. Thank you very much. Thank you, Kevin. Any questions from the room? Yes, decided I've got a loud voice. I couldn't have done that without the microphone. I think the slide that you just showed in the relative valuation is very compelling, deeply undervalued. How do we as potential investors better understand your strategy for extracting value that is getting investors to recognize that value and get comfort that you have a path forward to rerate. Yeah, I think first of all, it was just getting the story bedded down right over the last number of quarters, we weren't able to articulate really how we were going to scope this and how we're going to move it forward. So we've been able to do that now, it's getting out to the market and explaining really what the pathway forward is. So I think there'll be a number of construction milestones that we'll be able to articulate over the next year and a half. I think, you know, another big focus will be quartering corre performance on the oxides and illustrating the free cash flow potential of, of that operation. And then also, you know, coming out with the increasing amount of exploration news flow, right? So I think our job now is that we can finally get out here and tell a story is to do just that. And I suppose of a bias, I think we're moving into the M and a part of the cycle. theoretically, all companies are looking at all companies all the time. Strategically speaking, what is management and the board thinking about in terms of M and A, in terms of inquisitor interest and then just sorry, one last follow up question, how much do you think the Burkina Burkina faso risk is just playing into general investor and corporate appetite? Yeah, look in terms of M and A here, you know, our job right now, these valuations put her head down and, and, and to realize valuation, right? If, if somebody comes and knocks on our door, our job is to fight for the highest valuation possible and we'll do that. But in the near term here again, it's, it's put her head down and, and deliver. your, your second question is a good point. We've actually prepared a slide on that one because it's, it's quite a common one that we do get. And really what I think, you know, our evaluation where we've been left with is, is really the result of us with the power issues. You know, we, we started off, I think a lot of people and investors were looking at this as a company. Is it going to survive or not? And then to that rescope and not being able to come up to the market and tell things in what direction the project was going really hurt us. But when you look at West Africa here, I mean, you look, West African resources are 100% based in Burkina faso 20 kilometers to the south of us, up 67% in the last 12 months. We're down 21%. you know, and another good comparable we resolute. They've got a big operation in Mallee up 80%. So I don't know necessarily that it is the jurisdiction. There's some great returns to be had in West Africa and even some of these more jurisdiction risk, more challenges. Yeah. Thank you. Any further questions. Maybe just a quick one from me. Then we've got three minutes left. Obviously, the focus at the moment is on the hard rock expansion. But could you give us an indication of timing on the, the, the broader exploration? Because it sounds quite exciting. I mean, do you incorporate that into a, into a resource and then into a broader mind plan or are you thinking about further expansions or increases to life of mine? Yeah, look in the near term here. We already have a 12 year mine life. So there's no pressure to to start focusing on those, those details. I guess really what we're trying to show to the market and our internal targets. So we have a 7 to 10 million ounce mineralized system here. So over the coming years, it'll be a really wide space drilling that will be the focus, especially at depth below this broader shear zone. But if you look there in the top right hand corner of the slide, you can see P 17 in this area of the deposit, we actually get much higher grades and it's, it's near surface. It's a fold repeat that continues to pop up the surface. It's actually a different trend overall. And again, we get 40% higher grade hard rock mineralization. So this could be an area where we do really focus on more detailed drilling it somewhere. If we are successful and delineating additional centers of mineralization, we could bring that forward into the mine plan, increase the overall production profile, reduce the cost as well. So I would say P 17 would be the only area that we would consider about really pushing through detailed studies and move that forward. Whereas the broader picture will just be wide space drilling probably for the next few years to come. Perfect. Thank you. Good. Thank you very much, Kevin. Thank you.


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