Video: Orezone Gold eyes acquisitions to expand from troubled Burkina Faso

Orezone Gold (TSX: ORE; US-OTC: ORZCF) is resolving a power shortage at its new Bomboré gold mine in coup-prone Burkina Faso as it considers acquisitions in West Africa.

Bomboré, 85 km east of the capital city of Ouagadougou in the military-led country, started commercial production in December. But Orezone had to scramble for diesel generators after Genser Energy abandoned a liquid natural gas power contract, raising costs from US14¢ per kilowatt hour to US50¢ per kWh, or by more than US$100 per gold ounce produced.  

Now, the Vancouver-based company is building a transmission line to the country’s grid which is expected to eliminate the cost hike, Patrick Downey, Orezone president and chief executive officer, said in an interview with The Northern Miner at the Prospectors and Developers Association of Canada conference in Toronto this month.  

“We’ve just signed the contract this week and we should have it in before the end of the year,” Downey said Mar. 6. “That will bring our all-in sustaining costs down by over US$100 an ounce next year. It was a bit of a bit of an issue for us, but we dealt with it extremely fast.”  

The miner reports its 2022 results tomorrow followed by a presentation on Friday. It’s expected to update investors on operating in Burkina Faso, where the governing junta’s conflict with Islamic insurgents has killed thousands and forced 2 million others from their homes. It will also report on drilling at Bomboré to bolster a plan to more than double annual gold output by the end of 2025 to as much as 300,000 ounces. Downey said in the interview the expansion will be achieved with a proposed sulphide plant due to start construction next year.  

A 2019 feasibility study forecast Bomboré’s average annual production of 118,000 oz. gold per year over a 13-year mine life at an all-in sustaining cost of US$730 per ounce. However, the company continues to expand the deposit. Assays released this month show 40.4 metres grading 1.72 grams gold per tonne from 99 metres in hole BBD1294, including 8.25 metres grading 4.3 grams gold from 126.8 metres.  

“That’s a brand new zone significantly below any reserve pits,” Downey said. “That’s going into an updated feasibility study, which will be ready in the third quarter this year.”  

Regional opportunities

The miner is also considering a role in the region to follow in the footsteps of gold producers Perseus Mining (TSX: PRU; ASX: PRU) and Endeavour Mining (TSX: EDV; LSE: EDV; US-OTC: EDVMF).  

“We see ourselves as a catalyst for growth there,” Downey said. “The Endeavours are now looking at something bigger. We’re now looking at coming in underneath where they were.” 

Endeavour operates the Boungou, Mana and Houndé mines in Burkina Faso, the Sabodala-Massawa mine in Senegal and the Ity mine in Côte d’Ivoire. Perseus has Sissingué and Yaouré in Côte d’Ivoire and Edikan in Ghana.  

“There’s lots of exploration in the region, really, really nice projects in the area. We’re looking at a number of them now to see if we can start tucking in behind our expansion,” Downey said. “We’ve got a local bank behind us. Our debt came from a local West African bank, who knows the region as well. They’re very supportive of us.”  

Still, turmoil in Burkina Faso seems unending even if most terrorist attacks are in the north, away from Bomboré. The country underwent two military coups last year for a continent-high of 10 since independence in 1960, and now wants former colonial power France to withdraw the troops it was using to fight Islamic insurgents. Leaders of both recent coups used the failed conflict against jihadists to justify their takeovers. President Capt. Ibrahim Traoré has run the country since Sept. 30.  

“We’ve seen more from him in three months in terms of what he’s done and how he stepped up to the role,” Downey said. “We see a lot of pushback. So we’re quite positive that in the next 12 to 18 months we’ll see a positive change.”