Orezone: Hitting Gold Production Goals

41,310 ounces of gold, $45 million in the bank

Back in January I wrote a short piece here on Orezone (ORE.T) in which I held warrants.

Q4 of 2022 Orezone produced 22,258 ounces of gold. But that quarter included two months where the Burkina Faso mine was in “limp mode” due to power problems. At the end of Q4 the company had a little over 9 million dollars in cash.

What a difference three months makes. On April 5 Orezone reported its results for Q1 2023. 41,310 ounces of gold produced. Its cash position increased to $45.2 million and it repaid $9.8 million in principal on its senior notes.

Patrick Downey, President & CEO stated, “Following a successful ramp-up to commercial production in Q4-2022, Q1 marks a strong first full quarter of production at Bomboré. The Company remains well-positioned to meet its 2023 annual production guidance of 140,000 to 155,000 ounces, while further reducing its senior debt and improving its treasury.

During the quarter, the Bomboré mill continued to exceed design by achieving an average throughput of 13% above nameplate capacity while maintaining an average gold recovery of 92.2%.

I would, obviously, love to say the share price exploded. It didn’t, it rose gently from $1.32 immediately before the quarterly report to a current price of $1.47.

ORE also announced drilling results at its Bomboré Gold Mine on April 10, 2023. This drilling was both within the known resource area to confirm the continuity of near-surface oxide mineralization and to extend the oxide resource along strike.

Again, CEO Patrick Downey is quoted as saying, “Results of our ongoing shallow oxide drill program continue to show that the Bomboré mine remains open to expansion along known mineralized trends with certain target areas returning very significant high-grade intercepts.”

With an operating mine, 40,000 ounces of gold production a quarter, a lot of cash in the bank and an expanding resource, ORE is poised to make a run at $2.00 and beyond. When I wrote back in January, gold was trading at $1875, currently gold is flirting with $2000.

Amusingly, at $1.47 the shares I acquired with my warrants are just in the money. Yup, I am $0.03 ahead. I think I may wait a little while longer to book my profit. The last time gold touched $2000, ORE traded at $1.80 and it was not actually producing any. If these results are consistent and gold continues upwards Orezone should be re-rated as a gold producer.

(One note: people are often worried about the “country risk” implicit in Burkina Faso. I have no expertise and have not researched that risk in any significant way but I note that the Government of Burkina Faso holds a “10% carried interest” in the Bomboré Gold Mine. It is an important piece of the risk assessment puzzle.)

[Disclaimer: This is not investment advice. I am not an investment professional. I am down about 30% at the moment on my overall portfolio. I will write about companies that I hold. I will disclose any holdings. Do your own due diligence. Do it hard. Call the CEO.

I currently own Orezone shares which I intend to hold but which I may sell at any time.]