Orezone Gold Is No Longer Just a Burkina Faso Story

0:18All right, final update of the day. An old friend that's been a long time since we've had Mr. Patty Downey of Orzone Gold Corp onto the podcast. but there's been a lot of news since the last time Patty and I last spoke they do trade on the TSX and on the ASX now with ORE, that's a new one since the last time we spoke, they also trade on the OTCQX with ORZCF Patty, good to see you man what a year yeah Trevor, it has been a great year, very busy, very happy yeah, lots of changes we last spoke, that's definitely for sure Yeah, let's talk big picture here. It's no longer just about Burkina. You've expanded operations, new jurisdictions, maybe take some little risk profile off of the table.

1:11It's good to see. Kind of walk us through this entire decision of what needed to happen with the company and getting in the right step forward. Well, we'd always been looking. I mean, you know, from the point of view of being an operating mining company, one mine is never a business plan and then one jurisdiction is never a business plan. Although we've done very well there and continue to do well in terms of production and cash flow, etc. This opportunity came along actually at this conference last year. And when we looked at it, we really thought this fits us perfectly. You know, this is an asset that the previous company really weren't caring about.

1:48It wasn't really a focus of their portfolio. We saw a huge amount of upside. We spent five days on site with eight people doing due diligence really to see the team. Trevor, it's very important, not just the asset. If somebody's selling something, are the team convinced that this is a good asset to buy? We saw that right away. And finally, we closed the deal in March of this year. What that does for us is obviously diversifying the company, diversifying production, pushes it to this year 230 ,000, 240 ,000 ounces a year. Next year, it'll be 260 ,000, 270 ,000, and we see a clear path to 350 ,000, simply from the growth of both assets.

2:35And the fact that we bought a third asset as part of that purchase, which was a bit of a pleasant surprise for us. Yeah? Why such a surprise? Well, you know, it sort of got thrown in at the end and you know, we bought CASF, it was an operating mine You know are all in cost based on the study Procurement cost about 340 million US obviously we come out with a 1 billion nav on it with the current base baseline of production and We bought three other assets. We thought were early stage exploration. We didn't really know about them. Just commit at the very end for roughly 6 million Orozone shares. And one of them is a project called Hevo Hosko.

3:23The previous owners, Orozone, had done a detailed feasibility study in 2012. It was going to be their next project. It's on the Cadillac Larder break in the most famous mining jurisdiction in the world. Our neighbors are Iamgold, Agnico, Agnico, Eldorado, Westome, Iamgold. So a pretty good address. That showed a project doing about 105 ,000 to 110 ,000 ounces a year for 14 years. Done at$1350 ago.

3:58So we're going to bring a new study out. It'll be out in October. Okay. And we'll go straight into feasibility study, and it'll be our next development project. Is that study just going to be based on putting new numbers in there, not any additional technical work? Yes, we've done additional metallurgical work, but all the work, we did a detailed review of the work that was done. It was done all to high quality feasibility level. All the baseline permitting data was all done to current Quebec permitting requirements. So all that work has been done. 400 ,000 meters of drilling. What we're very excited about is they just started to drill into the deeper sort of structures, that you know the Abitibi, the Larder Lake break there is famous for these high-grade structures and they're hitting some very interesting numbers so we'll also follow up on that.

4:50So next year we'll be doing some infill drilling to expand the resource in terms of feasibility size and we will also be doing some drilling following these high-grade structures that we're seeing like results that were like 53 grams over eight meters type stuff down you know just below the pit so still quite shallow yeah so we've got a lot on our plate and we were sort of and we'll end up being sort of 60 canadian 40 burkina type of portfolio in the next coming years okay so maybe talk about it was a necessity to kind of jurisdictionally de-risk I mean last time you and I chatted we were specifically talking about Bambori and obviously still the lead driver of the company but it felt like some some sort of change needed it needed to happen if you can share with us kind of what those conversations are like it's like okay well what kind of options are on the table that fits the profile of the company?

5:55Well I've done a lot of M &A in my day and the first thing you got to do is what pond can we fish in? Can we catch a fish in this pond or is going to be other guys with better equipment, better gear, whatever that's gonna knock us out of the water. This came along it fitted us right down. We knew other bigger companies, you know the plan for the previous company was shut it down, permit a couple of pets, reopen it. They weren't putting any development underground, they weren't drilling underground is still quite shallow so we knew okay there can't be a huge amount of people after this and it's right down our wheelhouse as the sort of things that we do so once we got in there we really actively pursued it we looked at a lot of things probably 30 sort of projects we were close on a few um but this was something that we felt well this this is an asset the other key thing is we We get 37 kilometers of that belt on a major structural break in the Ava Tibi.

6:53And the reason it hasn't been really drilled was, number one, the previous owners didn't have the focus or even really the capital to do that. Number two, up in that area, like Detour Lake, you've got this 30 to 50 meter clay cover. So exploration is not easy. But when you've got a six million ounce asset sitting there, which Casa Berardi is, three million mined, three million M &I resource reserves still sitting there. You know there's a big system. There's some drilling historically but very little on the region. So we'll also look at that and we'll have a regional exploration program. So it fits us like we know how to operate, great exploration team, it was the right price, the right structure for us.

7:39So we're extremely happy with, and we didn't blow up the share structure, we issued 9.9 to get it. you know and yeah we're immediately like this year we're doing probably to our account 60 plus thousand ounces we're cash flowing very strongly we bought new equipment already we've got a contractor on board to advance the development got a new COO in French Canadian VP exploration so we're putting all the pieces in place to really ramp it up and people are getting it that this was an unloved asset now in the right hands. Yeah, very much. In the summer, there was a little bit of a scare of the wildfires.

8:20Yeah. You know, mining is hard. You can't escape danger. Well, we're actually the company that we spotted the fire, and it was on a little island. We alerted the authorities. We voluntarily left the site, and I couldn't be happier with the response from the local council, what they did. we get back after five days we were sort of guiding from that that this could be our weakest quarter but the team have really picked up and it's they've really backfilled that quarter those five days that we've missed we wrap the mill up and so mining is mining but if you've got a good team of people they'll they'll they'll do the right thing yeah yeah where does that leave your guidance here for the rest of the year?

9:06I think we'll do 230, 240 this year. I would say Bombore will be around about 170. CASA, as I said, would be around 60, 70. I would say it's probably closer to 70 for us, looking at what I see now. We're now getting into better stopes that we sort of knew were there, but we were sort of caught up with the development to get into them quicker than we planned. We're getting better grade in the pit because they weren't grade-controlled drilling, so they were blasting and just a lot of dilution, a lot of mixing. We've changed those practices, so now they're seeing the benefit of that. So, yeah, I'm pretty happy where things are going.

9:50Any sort of response from the Bikina side on this move? I mean, Orzone's always been so Bikina-focused, right? You've done so much good, not only with Bombore, but with the local communities. Was there any concern that your expansion into Canada maybe felt like, not necessarily turning your back, but taking some of your time away? Not at all. Our biggest shareholder is Burkina Abbey, Mr. Nassi. He owns 15.5%. He was more than happy with what we did. I met with the Minister of Mines, Minister of Finance, told them. As long as we're not doing anything different there, They're very happy with how we do our business.

10:29They know people diversify mining assets, etc. So no, nothing in that regard. We're actually bringing, and this is one of the key things, we're bringing some of our guys over to CASA. But what they're actually going to do, you know, the CASA operation, the mill, great people, but because there wasn't a focus from the corporate side of things you know didn't have a middle metal or just don't look at continuous improvement we've got some guys down there just to give you an example the Bombore oxide mill was built for 5.2 million tons per annum we haven't added a dollar of capital improvement and we're running at seven and that's what these guys can do smart guys not that old or 10 12 years in the business we're gonna bring a couple of them up to casa work in the mill sort of bring in proper controls etc.

11:23So it's an opportunity for people to share ideas and stuff etc. So it's also good for Burkina people to come up and see things and then go back and take other ideas back to the country. So it's been very positively received countrywide. Nothing whatsoever in regards to diversification. What has happened with the Hard Rock expansion of Bumbore? So we've done stage one. We did it, it was designed for 2.5 million tonnes. We built it on time, on budget again. That's our build team. That's the guys that will also be part of our expansion here in Canada. And Commission did reach commercial production in January.

12:04We're now consistently sort of close to 3 million tonnes per annum. We're building stage 2B. We'll be finished that in October. That was supposed to bring us to three but we're ready to hear so that should improve things. We've got another stage to do but before that what you're gonna see is we've drilled a hundred thousand meters in the past year or so that's going to inform a brand new resource in reserve at Bumbore. I think that's going to be very very pleasantly surprising for people. That will incorporate stage 2b probably two years down the road. We might advance it forward if things are negotiated successfully with the government on a final fiscal agreement with them.

12:47We have our current one but we want certain security on putting that capital in. The other key thing you're gonna see is over the past 18 months we've been doing a lot of structural geology work on Bombore. Bombore is a big system I mean we've got 5 million ounces to an average depth of 74 meters that's sort of crazy and we've been looking what are the feeder zones here. What's tying this together? We're now seeing that. You'll see some drill results coming out as we're targeting those things. And we see in the next number of years an underground component coming into that mill, which will, even if we don't do the expansion, will push us over 200 ,000 ounces a year.

13:28And we've got no, literally by the Q3, Q4 of next year, we'll have zero debt on Bombore. So it'll all be the cash going to our bottom line. The other point I want to make when people think about Bombore is this. We've taken out 60 million this year. We've just got the government approval to take out another 100, roughly 110. This year's dividends will be about 240. If people still see that as a 0.4 nav asset, All I'm gonna do is take my money and buy my stock. A dollar is still a dollar and that money coming out of Bombore will be used to continue to create long-term value for the ozone shareholders.

14:16And that's important. Once we've got this last debt paid all the cash starts coming to us. Just take IAM Gold for example at Essican. That asset is now valued the same in their portfolio but all the analysts at one times now because it's coming out just as a dollar every month and he's issuing dividends and he's buying back his shares that's all he's doing very good patty it's really good to see yeah great long time it's been a great year i really appreciate all your time with us yeah i feel but it feels like next year really is where well you're kind of full sales right well a couple of things you're gonna see q3 production numbers and then you're gonna see q4 production I think people get it you're gonna see drill results out of Casa you're gonna see drill results out of Bombore you're also gonna see a brand new study of have a house code which has got zero value in the stock I think that's gonna take people by surprise as well so it's gonna be a pretty fun year hopefully you and I can catch up and talk about some of that news as we continue to watch the news hit the tape.

15:22All right, that's your update. Long-deserved one from Orzone Gold. They do trade on the TSX and ASX with ORE and on the OTCQX with ORZCF. Patty, have a great rest of your week. Excellent. The information presented should not be considered investment advice. Mining Stock Daily and its affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.