Orezone (ORE.T) has issued an update on progress being made at the monster Bomboré gold project in Burkina Faso. The Bomboré deposit > 5.3 million ounces in all categories and is open for expansion at depth and along strike. Technical work is ongoing and a feasibility study is expected in the first quarter of 2015.
2015 is setting up to be a milestone year for Orezone shareholders with the feasibility study, a resource/mine plan update, permitting, and construction expected to begin at the end of the year. If everything falls into place Orezone hopes to be in production in 2017.
A base case PEA released on the project earlier this year shows an after tax internal rate of return of 23.9% using $1250 gold. The initial CAPEX is $180 million which makes the project financeable even in the current market environment. The project has nice leverage to the gold price with a 37.1% IRR at $1500 gold.
Orezone halted work at the Bomboré project for approximately a week during the recent political upheaval in Burkina Faso. Work has resumed although there was minor damage done to the camp by vandals. Burkina Faso has opened up 7 new gold mines since 2007.
Management has extensive experience in the mining industry; almost everyone on the senior management team and board of directors has been involved in the business for over 25 years. Ron Little, Founder and CEO has spent the last 15 years working in Africa developing gold projects.
"The technical work is progressing well and we are pleased with the continued positive results that reinforce our preliminary testwork, guidance and designs," said Tim Miller, chief operating officer for Orezone. "We are on schedule to complete the study in the first quarter of 2015 and apply for a mining permit to develop the project in the second quarter of 2015."
Orezone stock had a nice steady upward move of 110% from January to September.
It has since been cut in half because of the current political situation in Burkina and the general sell off in gold equities.
Orezone has ~$5.9 million in cash and is trading at an enterprise value of only $45 million which seems cheap for a 5 million ounce gold deposit.
Even with the political risk I would not be surprised if Orezone receives a takeover offer if it remains at current levels.
Symbol: ORE.T
Share price: $0.52
Shares outstanding: 95.68 M
Market cap: $49.8M
Read: Bomboré Gold Project Feasibility Study Update or Leading gold developer comments on Burkina Faso turmoil or These Are The Gold Projects You Want to Own In This Environment: Canaccord's Joe Mazumdar
I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.