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Orezone Gold hit a major milestone at its Bomboré project in Burkina Faso this week, with the receipt of final environmental approval for the project.
Orezone Gold (TSX:ORE) hit a major milestone at its Bomboré project in Burkina Faso this week. The company announced on Tuesday that it had received final approval for its Environmental and Social Impact Assessment for the project on Tuesday.
With the environmental approval secured, Bomboré is now set to be presented at the National Commission of Mines, the final step in the permitting process. David Sadowski of Raymond James called the news a major step towards shovel-ready status, giving Orezone an “outperform” rating with a price target of $1.20.
“With strong oxide economics at Bomboré, immense scalability, veteran leadership and attractive relative valuation (0.4x P/NAV), we view Orezone as a compelling vehicle for operationally-leveraged exposure to the strengthening gold price environment,” he said in an emailed note. “We encourage investors to bolster positions ahead of the company’s imminent transition to the shovel-ready stage.”
The market certainly took notice of the news, as shares of Orezone were up 12.36 percent, closing at $1.00 in Toronto. On the OTC, the company was up 10.69 percent to $0.751 per share.
To get a bit more insight into the news, the Investing News Network reached out to Ron Little, president and CEO of Orezone. In the interview below, he speaks about the challenges of obtaining environmental approval, financing options for Bomboré, and whether or not he sees a takeover in Orezone’s future.
Read on for more of what Little had to say:
INN: Orezone just received environmental approval for the mining permit for Bombore. What’s the key takeaway for investors?
RL: The environmental approval is the biggest hurdle in the process of a mining permit application. Based on the thoroughness of our study, and the support of the local communities for the project, we are anticipating the mining permit to be granted by Ministerial approval in Q3. There very few large scale, robust projects at $1,250 gold, that are or will be permitted this year. Orezone becomes a very unique and attractive investment and this approval has largely de-risked that investment.
INN: Can you touch briefly on the permitting process in Burkina Faso? i.e., how far has Orezone come, and what steps still remain?
RL: We will now present the project to the National Commission of Mines, made up of about 20 cabinet Ministers. We will hold a Q&A as part of that presentation, after which they will make a recommendation as to granting the mining permit. We are still hopeful that this can happen in weeks and not months.
INN: As Bombore approaches the construction stage, what financing options is Orezone considering?
RL: We are working with various lenders to outline the size and terms of a facility. The project will bear up to $150 million in debt. The goal is to explore and secure such a facility in the next six to nine months. Under this structure, we will eventually require up to $100 million in equity for a total of $250 million. The equity is likely to be the last piece [of financing] once everything else has been outlined and confirmed.
A partner is another alternative that would not require any other significant equity. So we will be exploring those options and anything else that might be much more accretive and a better return for our current shareholders.
INN: Endeavour Mining (TSX:EDV) recently announced plans to acquire True Gold, another gold company operating in Burkina Faso. Do you see a takeover in Orezone’s future?
RL: As I had mentioned, we are large, low cost and in a good jurisdiction. When you are this unique in a bull market, you cannot rule out that possibility.
That said, we started building what is now the largest mine in the country (Essakane) back in 2008 and secured the largest independent mine financing facility for the country, so we have the experience, capability and desire to build it.
INN: What will Orezone’s immediate next steps be?
RL: Lots of marketing, and working on a debt facility, as well as a review of the April 2015 feasibility study including detailed engineering, updated costing and the necessary work to get the project shovel ready within nine months. Our last drill program at P17S located 2 kilometers south of the orebody hit more than 30 holes averaging 2.65 grams per tonne of gold over a 7.1 meter width close to surface.
This is a much higher grade than the average grade of the deposit, and we will likely complete more drilling to investigate the limits of this zone. Continued positive results at P17S could enhance the economics of a Phase 2 plant expansion that would handle a blend of oxide and higher grade sulphide material.
At slightly higher gold prices, the expansion could significantly increase the value of the project without much additional drilling or feasibility test work, as much of it was completed between 2011 to 2013 during better gold price and market conditions.
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Orezone Gold is a client of the Investing News Network. This article is part of the company’s paid advertising campaign.
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