OREZONE INCREASES BOMBORÉ AFTER-TAX NPV BY $137.5M (+62%) AND RESERVES BY 686kOZ (+60%) WITH MODEST ADDITIONAL UPFRONT CAPITAL LOM average annual gold production of 118koz, After-tax NPV5% of US$361M, IRR of 44% and LOM AISC of $730/oz
Orezone Gold Corporation
910-1111 Melville Street
Vancouver, BC, V6E 3V6
Tel: 778-945-8977
OREZONE INCREASES BOMBORÉ AFTER-TAX NPV BY $137.5M (+62%) AND RESERVES
BY 686kOZ (+60%) WITH MODEST ADDITIONAL UPFRONT CAPITAL
LOM average annual gold production of 118koz, After-tax NPV5% of US$361M, IRR of 44% and LOM AISC of $730/oz
(All reported figures are in US dollars and are on a 100% project basis unless otherwise stated)
June 26, 2019 – Vancouver, BC - Orezone Gold Corporation (TSXV:ORE) (“Orezone” or the “Company”) is pleased
to report the results of its updated feasibility study (the “2019 FS”) which incorporates a staged Phase II Sulphide
Expansion for its 90%-owned Bomboré Gold Project in Burkina Faso, West Africa.
2019 FEASIBILITY STUDY HIGHLIGHTS (at Base Case gold price of $1,300/oz)
• Pre-tax NPV5% of $513.5M and IRR(1) of 61.9% with a 1.5-year payback
• After-tax NPV5% of $361.0M and IRR(1) of 43.8% with a 2.5-year payback
• Mine life of 13+ years with life-of-mine (“LOM”) gold production of 1.6M ounces and average annual
production of 133.8k ounces in the first 10 years
• Initial project construction costs estimated at $153.0M
• First gold pour targeted for June 2021
• LOM expansion capital costs of $63.2M
• LOM sustaining capital costs of $66.2M
• LOM cash costs of $681/oz with cash costs of $629/oz in the first 10 years
• LOM AISC(2) of $730/oz with AISC(2) of $672/oz in the first 10 years
Notes:
1. IRR calculated from start of commercial production.
2. AISC excludes Corporate G&A.
The 2019 FS incorporates a staged Phase II Sulphide Expansion with production commencing in Year 3 of oxide
operations. This expansion, funded from oxide cashflows, significantly improves the overall gold production
profile and project economics by processing 17.6Mt of higher-grade sulphide and lower-grade transition (“LT”)
ore. Furthermore, the addition of these Reserves and the oxides within the “Restricted Zones” facilitate s the
increase in the annual plant throughput from 4.5 million tonnes per annum (“Mtpa”) in the 2018 FS to 5.2Mtpa
in the 2019 FS.
“The staged development approach at Bomboré results in increased annual gold production, improves operating
margins and significantly enhances economics including a material increase in after-tax NPV of $137.5M. The
results of the 2019 FS confirm that Bomboré is a long -life, low -cost gold mine and we continue to evaluate
additional project opportunities.” said Patrick Downey, President and CEO. “ Equally important, the decision to
complete the Phase II Sulphide Expansion after the start -up of oxide operations , allows the Company to fund
construction of the sulphide circuit without the need for additional upfront capital.”
Lycopodium Minerals Canada Ltd. (“Lycopodium”) of Toronto, Canada was the lead 2019 FS consultant (Process
Engineering and Overall Study Manager) , supported by Knight Piésold Consulting. of Denver, USA (Tailings and
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Water Storage Systems), AMC Consultants (“AMC”) of Vancouver, Canada and Maidenhead, United Kingdom
(Reserves and Mining), Roscoe Postle Associates Inc. (“RPA”) of Toronto, Canada (Mineral Resources) and
AnteaGroup®, France (Social & Environmental).
The Company will host a conference call and webcast on Thursday, June 27th at 10:30 am EDT to further discuss
the Bomboré 2019 FS results. Details are provided at the end of this press release.
BASE CASE SUMMARY
Table 1 – Comparison of 2018 FS versus 2019 FS
Description 2018 FS 2019 FS
Base Case Gold Price (US$/oz) 1,275 1,300
Mine Life (years) 12.3 13.3
Total Waste Tonnes Mined (Mt) 93.8 164.4
Total Ore Tonnes Mined (Mt) 56.0 70.13
Strip Ratio 1.68 2.34
Production
Processing Annual Throughput (Mt) 4.5 5.2
Total Gold Ounces Recovered (ounces) 1,024,239 1,599,569
Average Annual Gold Production (ounces) 83,271 117,760
Operating Costs
Unit Operating Costs ($ per tonne processed) 12.38 15.53
Cash Costs ($/ounce) 677 681
AISC ($/ounce) 746 730
Capital Costs
Initial Construction Costs ($M) 143.8 153.0
Sustaining Capital Costs ($M) 58.9 66.2
Closure Costs ($M) 14.5 17.9
Financials1, 2
Pre-tax NPV(5%)(millions) 315.2 513.5
Pre-tax IRR 59.3% 61.9%
Post-tax NPV(5%)(millions) 223.5 361.0
Post-tax IRR 42.4% 43.8%
Notes:
1. Represents total project cash flows net of government royalties and taxes. The Government of Burkina Faso benefits from
a 10% free-carried interest, sales royalties (4% NSR between $1,000 and $1,300 Au), Local Development Mining Fund tax
(1% NSR), corporate income tax (27.5% tax rate), fuel taxes, VAT and withholding taxes on services.
2. Exchange rate assumptions: XOF:USD = 550; USD:EURO = 1.19; XOF:EURO = 655.957; Fuel price delivered to site: Diesel
= $1.05/litre; Heavy-Fuel Oil = $0.62/litre.
3. Total ore Tonnes Mined and stated Mineral Reserves in Table 3 exclude 1.7M tonnes of mineralized low-grade material
not in the current mill feed schedule.
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The Phase I oxide operation is scheduled to commence commercial production in Q4 -2021 after a 23 -month
construction period followed by 4 months of commissioning and ramp -up to commercial production .
Construction of the Phase II Sulphide Expansion will start in 2023 with the introduction of sulphide feed in
Q1-2024.
The sulphide circuit will be designed for a throughput of 2.2Mtpa and consists of a single stage jaw crusher, SAG
mill, pre-leach thickener, a pre -oxidation tank and three leach tanks. After 24 hours of leaching, the sulphide
material then combines with t he oxide material in the existing Carbon in Leach (“ CIL”) circuit for final leaching
and gold recovery. The combined oxide/sulphide throughput will remain at 5.2Mtpa. As previously disclosed,
the sulphide circuit was originally contemplated to be 1.2Mpta but further optimization studies confirmed that
the higher-grade LT and sulphide ore would support a 2.2Mtpa circuit.
MINERAL RESOURCE AND MINERAL RESERVE
RPA provided an updated Mineral Re source estimate with an effective date of January 5 , 2017 (“2017 Mineral
Resources”) by incorporating the oxide material within the previously excluded “Restricted Zones” and all drilling
completed to that date on the high-grade P17S deposit.
The Mineral Reserve s estimate for the 2019 FS was prepared by AMC and is based on th e 2017 Mineral
Resources.
The Mineral Resource estimate comprises five separate block models which have been combined into a global
resource as shown in Table 2 below.
Table 2 - Bomboré Mineral Resource Estimate, as of January 5, 2017
Classification Measured Indicated Measured + Indicated Inferred
Cut-off Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained
Au g/t 000 t Au g/t Au koz 000 t Au g/t Au koz 000 t Au g/t Au koz 000 t Au g/t Au koz
Oxides 0.20 31,600 0.62 628 75,300 0.53 1,273 106,900 0.55 1,901 20, 900 0.40 265
Sulphides 0.2 / 0.38 9,000 0.90 260 113,600 0.79 2,894 122,600 0.80 3,154 32,400 0.81 842
TOTAL 40,600 0.68 888 188,900 0.69 4,167 229,400 0.69 5,055 53,300 0.65 1,107
Notes:
1. CIM definitions (2014) were followed for Mineral Resources.
2. Mineral Resource are inclusive of Mineral Reserves.
3. Oxide resources are made up of the regolith, saprolite and upper transition layers reported at a cut-off of 0.2 g/t Au.
4. Sulphide resources are made up of lower transition and fresh layers reported at a cut-off of 0.2 g/t Au and 0.38 g/t Au respectively.
5. Mineral Resources have been constrained within a preliminary pit shell generated in Whittle software.
6. Mineral Resources are estimated using a long-term gold price of US$1,400 per ounce.
7. A minimum mining width of approximately 3 m was used.
8. Bulk densities vary by material type.
9. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
10. Numbers may not add due to rounding.
For the Mineral Reserve estimate, AMC developed new reserve block models, for each of the resource block
models, by applying the modifying factors necessary for conversion of Mineral Resources to Mineral Reserves.
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Those factors included amongst others, weathering profiles, operating costs , mining dilution and extraction
factors, and pit slope angles. Cut-off grade determinations for block assignments (ore versus waste) were based
on a gold price of $1,250/oz.
Table 3 - Bomboré Mineral Reserve Estimate, June 26, 2019
Classification Proven Probable Proven & Probable
Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained
000 t Au g/t Au koz 000 t Au g/t Au koz 000 t Au g/t Au koz
Oxides 20,213 0.73 473 32,326 0.66 687 52,539 0.69 1,161
Sulphides 3,241 1.31 136 14,320 1.17 538 17,561 1.19 675
TOTAL 23,453 0.81 610 46,647 0.82 1,225 70,100 0.81 1,835
Notes:
1. Oxides include regolith, saprolite and upper transition material.
2. Sulphides include lower transition and fresh material.
3. Mineral Reserves have been estimated in accordance with the CIM Definition Standards.
4. Mineral Reserves are estimated at an average long-term gold price of US$1,250/troy oz.
5. Mineral Reserves are based on cut -off grades that range from 0.300 to 0.325 g/t Au for oxides , and 0.466 to 0.555 g/t Au fo r
sulphides.
6. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
7. There are 1.7Mt of low -grade mineralized oxide material above cut -off grade remaining in the stockpiles that are not included in
the Reserves Estimate.
8. Mining recovery factors estimated at 98% for Oxides and 96%-100% for sulphides.
9. Processing recovery varies by grade, weathering unit and location.
10. Rounding of some figures may lead to minor discrepancies in totals.
MINE PLAN AND PRODUCTION SUMMARY
The 2019 FS mine plan is based on an annual feed rate to the plant of 5.2 Mtpa of ore, delivering higher-grade
ore in the early years of the project , by stockpiling of lower-grade material and subsequent drawdowns in the
later years. The first 2.5 years of production will be free-dig oxide ore only. In year 3 the sulphide circuit will be
commissioned and as it ramps up to 2.2Mtpa capacity, the throughput of the oxide circuit will be correspondingly
reduced to 3.0Mtpa to maintain the combined capacity at 5.2Mtpa.
Oxide mine waste will be utilized as construction material for the tailings storage facility, thereby reducing water
management costs and closure costs associated with waste dumps. The oxide ore is free-dig and is composed of
over 70% passing 150 micron material that requires minimal grinding before leaching. The upper transition,
although relatively soft, will require some grinding to achieve expected recoveries. The oxide ball mill is sized to
handle a 70:30 oxide to upper transition blend.
The LT and sulphide ore, which require conventional drill and blast mining methods, will be mined using a
separate equipment fleet to account for the increased density, abrasion and hardness.
The calculated drill and blast pattern for the LT ore and waste are significantly lower than sulphide material with
most of the LT material being minable through machine ripping.
Estimated gold production and diluted head grades for each year are summarized in the table below.
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Table 4 - Summary Production Schedule
Year
Oxide ore
tonnes
processed
(Mt)
Oxide
Gold
grade
(g/t)
Sulphide /
LT ore
tonnes
processed
(Mt)
Sulphide /
LT Gold
grade
(g/t)
Total ore
tonnes
processed
(Mt)
Gold
grade
(g/t)
Recoveries
(%)
Gold
Production
('000
ounces)
Pre-prod. 1.21 1.02 0.00 0.00 1.21 1.02 92.3% 36.63
1 5.19 1.03 0.00 0.00 5.19 1.03 92.3% 158.58
2 5.20 0.91 0.00 0.00 5.20 0.91 91.2% 138.56
3 3.75 0.73 1.45 1.59 5.20 0.97 88.7% 144.15
4 3.00 0.68 2.20 1.46 5.20 1.01 88.7% 149.70
5 3.00 0.76 2.20 1.23 5.20 0.96 87.2% 139.51
6 3.00 0.65 2.20 1.20 5.20 0.89 85.0% 125.82
7 3.00 0.70 2.20 1.12 5.20 0.88 86.0% 126.33
8 3.00 0.66 2.20 1.12 5.20 0.85 85.4% 121.83
9 3.00 0.66 2.20 1.12 5.20 0.85 85.3% 121.63
10 3.08 0.67 2.13 0.94 5.20 0.78 85.8% 112.07
11 4.55 0.57 0.65 0.92 5.20 0.62 85.8% 88.54
12 5.11 0.49 0.091 1.00 5.20 0.50 83.9% 70.32
13 5.16 0.40 0.041 0.87 5.20 0.40 80.1% 53.58
14 1.29 0.37 0.011 0.83 1.30 0.37 78.7% 12.32
Life of Mine 52.54 0.69 17.56 1.19 70.10 0.81 87.2% 1599.57
Note 1: LT and sulphide feeds will be crushed and processed through the oxide circuit, thereby eliminating the need to operate the
sulphide SAG mill.
MINE PLAN
Oxides
Mining will be by a local contractor using a conventional diesel-hydraulic excavator fleet, and small 30t and 50t
road type rear- dump truck s. Ore and waste are all “free -dig” material with little or no oversize material
eliminating the need for drill and blast . This type of load and haul fleet is common in Burkina Faso and West
Africa for similar free-dig material and will provide the needed versatility for a mine plan having a large number
of shallow pits of varying tonnage.
Sulphides
Mining of the sulphides in the first three years of Phase II will incorporate the high grade P17S ore blended with
higher-grade material from the other sulphide zones to maximize the value of the project. The schedule was
developed to satisfy physical and practical constraints including a sustainable production profile, achievable
vertical advance rates, practical use of low -grade stockpiling and minimizing mining of oxides and sulphides
concurrently within the same pits. Mining of the LT and sulphides will be by contractor with trucks suited to the
more abrasive and denser rock types. T he LT requires a less dense drill hole pattern and lower powder factor
than needed for sulphides.
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MINERAL PROCESSING
Metallurgical testing has been ongoing on all ore types since 2008. The most recent testing on oxide material
was completed by SGS in Quebec in Q4 2017 and included grinding and reagent optimization work. Testing on
the LT and sulphide ores was completed in May 2019 by Base Metallurgical Laboratories located in Kelowna,
British Columbia. Testing was performed on a series of composite and variability samples from the various pits.
Test work included determination of grinding and abrasion parameters and the effect of grind size, cyanide
addition, pre-aeration and leach time on gold extraction. Results also included settling tests and tailings and
waste rock characterization test work.
Lycopodium has reviewed the historical and recent test data and based the process flowsheet on this work.
Oxides
The flowsheet and plant have been designed to process the soft fine-grained ore which eliminated the need for
a crushing plant ahead of the grinding circuit. The ore is direct dumped across a static grizzly into a large hopper
and onto a variable speed apron feeder. From the apron feeder, the ore is transferred to a conveyor that feeds
directly to a ball mill. The plant is designed with two ore transfer points and one conveyor, thereby minimizing
issues associated with wet sticky ore in the rainy season. The ball mill is equipped with a variable speed drive
sized to accommodate a wide range of ore types and hardness.
Ball mill discharge is pumped to a cyclone cluster with the oversize reporting back to the mill and the undersize
fed to a pre-leach tank and seven-stage CIL circuit. The CIL tails are thickened to recover process water and then
pumped to a lined tailings facility. The tailings facility is designed to be zero discharge, with water recovered in a
decant tower and returned to the process water tank at the plant. Gold is recovered in a standard 10t carbon
desorption plant, finishing with electrowinning and smelting to produce gold doré bars.
Sulphides
The comminution circuit will consist of a primary jaw crusher followed by a SAG mill in closed circu it with
hydrocyclones and a recirculation pebble conveyor system. A surge ore bin and dead ore stockpile are included
in the design to provide surge capacity between the crushing and grinding stages. The cyclone overflow will be
thickened and transferred to the pre-oxidation and leaching circuit. After 24 hours leaching, the leached sulphide
product will be combined with the oxide mill product and fed to the CIL circuit for an additional 24 hours of
residence time and gold recovery onto carbon.
ADR Plant Expansion
The 2018 FS was designed with a 5t carbon elution circuit for gold recovery. Additional test work completed in
2019 indicated that this plant was undersized and a new 10t elution circuit has been incorporated in the 2019
FS. This will allow carbon stripping to be completed on a more systematic basis and provide capacity for further
expansion.
Optimization of the Tailing Storage Facility
The 2018 FS was based on a tailings storage facility footprint that was restricted by the location of low-grade ore
stockpiles. During the Front-End Engineering and Design (FEED), this design was optimized , which eliminated
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these stockpiles allowing for an expanded TSF footprint. This has reduced tailings em bankment construction
quantities through the LOM, reducing both up-front capital and ongoing sustaining capital.
PROJECT INFRASTRUCTURE
The project benefits from a mining -friendly jurisdiction, a strong mining culture, and excellent local
infrastructure. Burkina Faso has experienced rapid development of its mining sector over the past decade which
has contributed to the growth of available mining contractors, suppliers, and skilled labour. In addition, the
project is favourably situated only 85 kilometres from the capital city of Ouagadougou, accessed by a 5 kilometre
all weather gravel road connecting to the main sealed highway (RN4) that runs between the capital and the coast.
The Company has already seen the benefit of this in certain early works contracts where mobilization costs have
been significantly lower than anticipated.
Offices and Accommodation
Orezone has constructed a main camp, kitchen and office complex including warehousing, sample prepa ration
facility and small vehicle repair shop. The facility was upgraded in 2018/19 including new accommodation blocks
for senior staff, upgrades to the kitchen and dining facility and certain new offices for technical staff. A contractor
will continue to be responsible for all camp operations including catering, cleaning and maintenance activities.
All communication systems, including internet, are in place.
Power Supply
A heavy-fuel oil (“HFO”) power station will be constructed at the process plant by an independent power provider
(“IPP”) under a build-own-operate agreement. The power station will be fitted with 7 x 1.6 MW heavy duty HFO
generator engines (or similar) with five operating and two standby units.
In year 2 of o xide operations, additional larger HFO units will be installed by the IPP as part of the sulphide
expansion.
Aerial transmission lines of 11 kV will be constructed from the power station to the tailings storage facility, water
storage facility, camp, and the mining contractor’s area.
The power station will utilize a dedicated bulk HFO storage facility located adjacent to the powerhouse.
Water Supply
Raw water will be sourced from the seasonal Nobsin River and diverted by a permanent weir into an off-channel
reservoir (“OCR”). The OCR is essentially one of the mine pits excavated early and designed to hold sufficient
water for the project on an annual basis.
Pumps will transfer water from the OCR to the raw and process water tanks by pipeline.
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PROJECT ECONOMICS
OPERATING COSTS
Table 5 - Operating Cost Summary
Description Total Costs
($M) $/tonne processed $/ounce
Mining 386.3 5.51 242
Processing 456.9 6.52 286
Site G&A 139.4 1.99 87
Refining and transport 2.4 0.03 1
Government royalties 103.9 1.48 65
Total Cash Cost 1089.0 15.53 681
Sustaining capital 66.2 0.94 41
Rehabilitation and closure 17.9 0.26 11
Salvage Value (5.6) (0.08) (3)
All-in Sustaining Cost1 1167.5 16.66 730
Notes:
1. AISC excludes corporate G&A expenses.
2. Numbers may not add up due to rounding.
Mining costs are based on a detailed annual mining schedule incorporating the actual haul distances and pit
depths as per contractor quotes. Processing costs are LOM averages and include various annual blends of oxide,
transition and sulphide ores as mill feed, incorporating the various associated reagent consumptions, work
indices, abrasion indices and power requirements.
INITIAL AND EXPANSION PROJECT CAPITAL COSTS
Since the release of the 2018 FS significant work has been completed to de-risk the project. FEED for the Phase I
oxide facility is complete which has more accurately defined material quantities and detailed firm quotes have
also been obtained for all major equipment. The camp and early stage civil works are complete and the Phase I
Resettlement Action Plan (“RAP”) construction is in progress.
Outside of the firm quotes received to date the remaining capital estimates are based on quotes including taxes
and freight received up to the end of May 2019 from potential equipment and service providers. Other key
aspects of the capital cost estimate include:
• Pre-production capital costs include the construction of the OCR and completion of remaining Phase I
and II RAP activities prior to commencement of oxide mining
• Construction of the Phase II Sulphide Expansion commences in Year 2 of oxide operations
o The bulk earthworks for the sulphides will have already been completed during the oxide stage
simplifying construction of the expansion
o Additional HFO power generation units will be added as necessary by the IPP
o A small focussed owner’s team will be dedicated to overseeing construction and commissioning
of the sulphide expansion.