OTTAWA, ONTARIO (AMEX: OZN) is pleased to announce an update to
the NI 43-101 compliant Definitive Feasibility Study ("DFS") for
the Essakane Project in Burkina Faso, West Africa that was
previously announced in September 2007. The NI 43-101 document,
prepared by GMining in collaboration with Minproc and Snowdon, will
be filed on Sedar within the next 30 days.
Summary of the principle changes to the DFS are as follows:
- Recoverable reserves have increased by 18% from 2.5Moz at 1.78
g/t to 3.0Moz at 1.67 g/t using a US$600 gold price as compared to
US$500. The increase would be substantially higher using current
spot prices due to the grade-tonnage relationship of the
deposit.
- The CIL Plant capacity has been increased from 5.4Mt/year to
7.5Mt/year to enable softer oxide ores to be processed at a higher
rate for the first few years of operation. Annual production will
increase 16% to an average of 330,000 ounces per year for the first
four years and a faster project payback will result. Peak year will
be the first year with 374,000 ounces. The mine life has increased
from 8.5 to 9.4 years.
- The stripping ratio has been reduced by 15% to 2.7:1.
- Cash Costs, including royalties and government charges, have
decreased slightly and are expected to be US$358 per ounce using an
US$800 gold price and $US85 oil price. Every dollar change in the
oil price will represent approximately a one dollar change in Cash
Costs.
- Capital costs have increased by 21% from US$347M to US$420M as
a result of the increased plant capacity, increased allowances for
contingencies and owner's costs, changes in US/Euro exchange rates
and general inflation. These figures do not include Sustaining
Capital of US$26M and US$25.7M in Working Capital which increased
by US$1M over the previous DFS.
- The undiscounted pre-tax Net Present Value ("NPV") has
increased by 38% compared to the previous DFS using US$720 gold and
US$80 oil price assumptions. The improvement in NPV would be
substantially higher using current spot prices for oil and gold
(see attached table for after tax NPV's at various price
assumptions).
- The time line for construction remains at 18 months. All long
lead items including the grinding circuit, the fleet and generators
have been ordered with expected delivery dates in time for a
start-up in early 2010.
"We are very pleased with the results of the update. Even though
capital expenditures have increased, the net result is a larger and
more robust project with a much higher NPV. Our goal is to continue
to run the plant at higher capacity, well past the first few years,
by focusing on the known satellite oxide deposits. Higher gold
prices will also yield an increase in reserves," stated Ron Little,
Chief Executive Officer for Orezone.
Financial Model
Based on the economic parameters that were determined for the
Essakane Project, the surface mine yields a life of mine average
production of 315,000 oz per year over 9.4 years for a total of
3.0Moz. Table 1 sets out the financial results using various gold
and fuel prices where changes in the gold price have a much more
significant impact on the Internal Rate of Return (IRR) and NPV
than changes in the oil price.
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Table 1
Summary of Financial Results
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Gold Price (US$/oz) 600 800 1000
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Oil Price (US$/bbl) 66 85 100
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Ounces Recovered (000 oz) 2,960 2,960 2,960
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Avg. Annual Production (000 oz) 315 315 315
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Cash Cost (US$/oz) including 3% royalty 337 358 375
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Total Cost (US$/oz) including depreciation 508 528 546
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After-Tax Project IRR 10% 21% 31%
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After-Tax NPV (0%) Million USD 289 629 984
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After-Tax NPV (5%) Million USD 116 377 642
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Orezone is an explorer and emerging gold producer whose main
asset is the Essakane Project, the largest gold deposit in Burkina
Faso, West Africa. Essakane contains 4.0Moz of indicated resources
and 1.3Mozs of inferred resources at a 0.5g/t cut-off. Recoverable
reserves contained within a US$600 gold price mine plan are 3.0Moz.
The deposit remains essentially open and untested below 260m from
surface and is surrounded by several satellites deposits. The
government of Burkina Faso has a 10% non-participating interest and
a 3% net smelter royalty in the project. Orezone has a pipeline of
developing projects, all located in politically stable areas of
West Africa, one of the world's fastest growing gold producing
regions. Orezone's mission is to create wealth by discovering and
developing the earth's resources in an efficient and responsible
manner.
Conference Call
A conference call will be held today at 11a.m. (ET) to discuss
this update. You may join the call by dialing toll free
877-323-2090 in Canada and the United States, in the Toronto area
at 416-695-6616 and for International calls dial the country code +
800-4222-8835. No access code is required. The conference call will
be recorded and you can listen to a playback of the call after the
event by dialing toll free 1-800-408-3053 in Canada and the United
States, or 416-695-5800. The pass code is 3262790.
Annual General Meeting in Ottawa Today
More information will be available today at 4:30pm at the
Company's Annual General Meeting at the Ottawa Rideau Club, 99 Bank
Street, 15th floor, Ottawa, Ontario.
FORWARD-LOOKING STATEMENTS AND FORWARD-LOOKING INFORMATION: This
news release contains certain "forward-looking statements" within
the meaning of Section 21E of the United States Securities Exchange
Act of 1934, as amended, and "forward-looking information" within
the meaning of applicable Canadian securities laws. Except for
statements of historical fact relating to the company, certain
information contained herein constitutes such forward-looking
statements and forward-looking information... Forward-looking
statements and forward-looking information are frequently
characterized by words such as "plan," "expect," "project,"
"intend," "believe," "anticipate", "estimate" and other similar
words, or statements that certain events or conditions "may" or
"will" occur. Forward-looking statements and forward-looking
information in this news release include statements with respect to
the, the time for filing the updated NI 43-101 report, future gold
and oil price expectations, expectations for revised capital and
operating costs, payback, mine life, IRR, and NPV and reserve
estimates for the Essakane Project and the time for production
start-up at the Essakane Project.
Forward-looking statements are based on certain assumptions and
the opinions and estimates of management at the date the statements
are made, and are subject to a variety of risks and uncertainties
and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking
statements. The assumptions include including that contracted
parties provide goods and/or services on the agreed timeframes,
that equipment necessary for construction and development is
available as scheduled and does not incur unforeseen breakdowns,
that no labour shortages or delays are incurred, that plant and
equipment functions are as specified, that no unusual geological or
technical problems occur, sufficient financing is available and in
place and that on-going contractual negotiations will be completely
successful and progressed and/or completed in a timely manner.
Factors that could cause the forward-looking statements and
forward-looking information to differ materially in actuality
include the inherent risks involved in the exploration and
development of mineral properties, the uncertainties involved in
interpreting drilling results and other geological data,
fluctuating metal prices, failure of contracted parties to perform
as contracted, the possibility of project cost overruns or
unanticipated costs and expenses, uncertainties relating to the
availability and costs of financing needed in the future and other
factors. The Company undertakes no obligation to update
forward-looking statements if circumstances or management's
estimates or opinions should change. The reader is cautioned not to
place undue reliance on forward-looking statements.
Readers are advised that National Instrument 43-101 of the
Canadian Securities Administrators requires that each category of
mineral reserves and mineral resources be reported separately.
Readers should refer to the annual information form of Orezone for
the year ended December 31, 2007, and other continuous disclosure
documents filed by Orezone since January 1, 2008 available at
www.sedar.com, for this detailed information, which is subject to
the qualifications and notes set forth therein.
Cautionary Note to United States Investors Concerning Estimates
of Measured, Indicated and Inferred Resources: This press release
uses the terms "Measured", "Indicated" and "Inferred" Resources.
United States investors are advised that while such terms are
recognized and required by Canadian regulations, the United States
Securities and Exchange Commission does not recognize them.
"Inferred Mineral Resources" have a great amount of uncertainty as
to their existence, and as to their economic and legal feasibility.
It cannot be assumed that all or any part of an Inferred Mineral
Resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of Inferred Mineral Resources may not form the
basis of feasibility or other economic studies. United States
investors are cautioned not to assume that all or any part of
Measured or Indicated Mineral Resources will ever be converted into
Mineral Reserves. United States investors are also cautioned not to
assume that all or any part of an Inferred Mineral Resource exists,
or is economically or legally mineable.
Contacts: Orezone Resources Inc. Ron Little, CEO 613-241-3699
888-673-0663 rlittle@orezone.com Orezone Resources Inc. Janet
Eastman, Manager IR 613-241-3699 888-673-0663
jeastman@orezone.com
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