VANCOUVER — West Africa-focused Orezone Gold (TSX: ORE; US-OTC: ORZCF) had been developing its multimillion-ounce Bomboré gold project in Burkina Faso until discrepancies in resource estimations brought activity to a halt last August.
Orezone’s share price plummeted nearly 75%, and the company was stuck in a holding pattern.
Things changed in May, however, with long-standing president and CEO Ronald Little stepping down.
Ottawa-based Orezone is now under the stewardship of president and CEO Patrick Downey, who has been on its board of directors for five years and became executive chairman in January. (Keith Peck has since become Orezone chairman.) Downey previously helmed Viceroy Exploration before Yamana Gold (TSX: YRI; NYSE: AUY) snapped it up for $600 million in 2006, and held several operating positions with Anglo American (LON: AAL) in South Africa.
“We needed a fresh look at things and [the board] decided an executive change was necessary. Ron was fantastic … but it just came to that point,” Downey says during an interview in Vancouver.
“My focus is twofold. First, to finish the reserve and feasibility study. Second, we have a significant exploration opportunity that hasn’t been realized. Our geological team looks through a more structural lens. It’s exciting.”
Orezone’s mine planning had been underpinned by a large, low-grade resource in Bomboré’s northern reaches. The Burkina Faso government approved the company’s mining permit application 10 months ago, and Orezone hoped to have a “shovel ready” project at the site by June.
Problems surfaced when Orezone switched engineering firms from SRK Consulting to Roscoe Postle Associates, whose “more conservative” estimation method lowered Bomboré’s global gold resources by 30% last August.
The project now hosts 218 million measured and indicated tonnes grading 0.68 gram gold per tonne for 4.8 million contained oz. gold. This estimate includes 53.4 million tonnes of oxide mineralization averaging 0.87 gram gold for 1.5 million contained ounces.
“I don’t think the technical revisions last year were managed effectively,” Downey said. “The oxide resources are much more disseminated than the current model, but the sulphide is within more discrete shear zones. That being said, further drilling in the oxides will show that we’re closer to the original numbers.”
Orezone’s feasibility study envisions a mine that would begin with a hybrid heap-leach, carbon-in-leach operation. The initial mining phase would have produced 135,000 oz. gold annually over an eight-year life at all-in sustaining costs of US$678 per ounce. Capital expenses for this first phase were pegged at US$250 million.
“We had focused on putting together a mine plan to move ahead with development, but let’s put that to bed,” Downey said. “Advancing the current iteration of Bomboré to a construction decision with our share price, and the level of debt we’d take on … is just not a smart idea. We may go down that road in the future, but it isn’t happening now.”
Later this year the company expects to release an updated resource and economic study, incorporating changes to Burkina Faso’s mining laws.
Meanwhile, Orezone’s senior vice-president Pascal Marquis has been tasked with revisiting the project’s geology to uncover any untapped, high-grade potential.
The company is emphasizing structural geology techniques — including orientated drilling and geophysics — to get a more detailed understanding of stratigraphy and rock types.
Orezone is focused on the P17S sulphide zone, which is hosted in a shallow granodiorite intrusive, 2 km south of the Bomboré mining permit. Previous drilling at the target to 60 metres deep resulted in a measured and indicated sulphide resource of 337,000 tonnes at 2.5 grams gold for 27,000 oz. gold.
Orezone reports that drilling this year at P17S has intersected mineralized granodiorite from surface to 150 metres deep, with a down-plunge continuity exceeding 425 metres.
Assays released in early June include: 12 metres of 3.4 grams gold from 133 metres deep in hole 76; 13 metres of 2.06 grams gold from 139 metres deep in hole 82; and 9.7 metres grading 3.38 grams gold from 130 metres deep in hole 83.
“We’ve hit intriguing, high-grade results along the P17 trend. We’re now closing the entire gap down south. It’s in the granodiorites, which is fundamentally different than what we looked at before,” Downey said.
“We’ve switched to the diamond rigs to better understand the folding and structural controls. We tied our drill results together and see a folding pattern. It’s opening up an entire area for us, and the geology and exploration upside are changing.”
The deposit is open at depth and to the north, while previous geophysical and geochemical surveys show nearby, similar targets that remain untested.
Orezone has completed over 13,000 metres of auger, reverse-circulation and core drilling this year.
The company is planning the next stage of drilling based on its geological modelling. Downey reckons the program will be at least 10,000 metres.
Orezone notes that P17S forms a 2.5 km long corridor — when combined with the 172 and P17 zones — that it says is prospective for higher-grade, granodiorite-hosted gold discoveries.
“We already have significant gold resources within a large orebody, but now we have this brand-new exploration target. We’re starting to believe we’re looking at a gold district,” Downey said.
“Plus you have B2Gold (TSX: BTO; NYSE-MKT: BTG) working on its Toega project to the south, and West African Resources (TSXV: WAF) advancing its Boulsa tenements nearby. I haven’t spoken to our neighbours quite yet, but it warrants a conversation.”
Orezone has traded in a 52-week range of 42¢ to $1.28 per share, and closed at 61¢ per share at press time. The company is down 80¢ since news of its resource revision in August 2016. It has 154 million shares outstanding for a $94-million market capitalization, and has $20 million in its treasury.