Orezone Announces Bomboré Phase II Expansion Study Results

Figure 1.

Bomboré 2023 LOM Production and Cost Profile (starting Q2-2023)

Figure 2.

Bomboré Mine Layout and Infrastructure

Figure 3.

Mining Schedule (starting Q2-2023)

Figure 4.

Processing Schedule (starting Q2-2023)

Figure 5.

Existing 5.9Mtpa Oxide Plant and New 4.4Mtpa Hard Rock Plant Layout

Figure 6.

4.4Mtpa Hard Rock Plant Flowsheet

Figure 7.

Bomboré Projects and Hard Rock Expansion Schedule

Phase II average annual gold production of 209,000oz at AISC of $1,121/oz, with LOM After-tax NPV5% of US$635.9M
(All reported figures are in US dollars and are on a 100% project basis unless otherwise stated)

VANCOUVER, British Columbia, Oct. 11, 2023 (GLOBE NEWSWIRE) -- Orezone Gold Corporation (TSX: ORE, OTCQX: ORZCF) (“Orezone” or “Company”) is pleased to report the results of its Phase II Expansion and Updated Life-of-Mine Feasibility Study (“2023 Study”) for its 90%-owned Bomboré Gold Mine, located in central Burkina Faso.

Bomboré achieved commercial production of its Phase I oxide plant in December 2022, which has operated successfully above nameplate to produce 76,783oz of gold at an All-In Sustaining Cost¹ (“AISC”) of $1,006/oz sold in H1-2023. The planned expansion at Bomboré from a processing rate of 5.9 million tonnes per annum (“Mtpa”) to 10.3Mtpa will deliver a significant increase in gold production at a low incremental capital cost. Construction of the new standalone 4.4Mtpa hard rock processing facility will enable Bomboré to produce an average of 209,000oz/yr at an AISC of $1,121/oz. First gold from the hard rock plant is scheduled for Q3-2025.

Bomboré 2023 Study Highlights (at Base Case gold price of $1,750/oz)

• After-tax NPV_5% of $635.9M with rapid payback
• Mine-life of 11.3 years with gold production totalling 2.11Moz
• Conventional open pit mining at a low strip ratio of less than 2:1
• Phase II hard rock plant capital costs of $167.5M
• Average annual gold production of 231,000oz in the first three full years after expansion at an AISC of $1,081/oz
  

Patrick Downey, President and CEO, commented: “The Bomboré 2023 Expansion and Updated Life-of-Mine feasibility study marks a major milestone in the growth of Orezone. The updated study highlights a material step-change in the mine’s future production profile, while maintaining a low overall cost structure. Furthermore, based on ongoing drilling results, we see excellent opportunities to continue to add higher grade resources and reserves that should enhance the production profile in future years.

With the continued support of our senior lender, Coris Bank International, the Company expects to finance the construction of the hard rock plant using a combination of debt and free cash flow from current operations.

Following the commissioning of the oxide plant in December 2022, on-time and under budget, and providing strong operational results through its first operating year, Orezone remains well positioned to deliver this next stage of brownfield growth at Bomboré. The parallel hard rock plant will be constructed at a modest capital cost as compared to a greenfield project as it will utilize many of the existing systems and infrastructure already in place including connection to the national electrical grid by the end of 2023.

Mining will continue as conventional open pit with a low overall strip ratio. We will use our operational and management experience in working with local mining contractors over the past two years to further enhance optimization in this area.

We now have firm bids and delivery times for several long lead pieces of equipment including the SAG mill and we intend to conclude evaluation and place orders for this equipment in Q4-2023. Full construction is expected to commence in Q1-2024 subject to financing and board approval.

The Phase II Expansion will create several hundred new employment opportunities during construction on top of the 2,400 direct local jobs that currently support existing operations. Once complete, the expansion will also create further long-term local employment and promote further investment in community programs and livelihood restoration projects that aim to improve the lives of local residents while providing a larger source of tax and royalty revenue for Burkina Faso.”

Idrissa Nassa, CEO of Coris Bank International, commented: “We congratulate Orezone on the release of a robust expansion study, and look forward to maintaining our close partnership with the Company and supporting the next stage of growth at Bomboré.”

Lycopodium Minerals Canada Ltd. ("Lycopodium") of Toronto, Canada was the lead 2023 Study consultant (Process Engineering and Overall Study Manager), supported by P&E Mining Consultants Inc. (Mineral Resource Estimates), Knight Piésold Pty Limited of Perth, Australia (Tailings and Water Management), AMC Mining Consultants (Canada) Ltd. ("AMC") of Vancouver, Canada (Mineral Reserves and Mining), and Africa Label Group Inc. (Social & Environmental).

CONFERENCE CALL AND WEBCAST

The Company will host a conference call and webcast to further discuss the Bomboré 2023 Study results. To participate, please use the following dial-in phone numbers or join the webcast using the link below:

Webcast

Please register for the webcast here: Orezone 2023 Study Conference Call and Webcast

Conference Call

A copy of the presentation will be available on the Company’s website.

2023 Study Summary

Table 1 – Summary of 2023 Study Results (starting Q2-2023)

Figure 1 – Bomboré 2023 LOM Production and Cost Profile (starting Q2-2023)

Figure 2 – Bomboré Mine Layout and Infrastructure

Comparison of 2023 Study to 2019 Feasibility Study

The results of the 2023 Study supersede the 2019 Feasibility Study (“2019 FS”). The 2023 Study incorporates the following main scope changes from the 2019 FS:

• Increased Resource Cut-off Grades: The applied cut-off grades utilized for the primary oxide and fresh rock units in the 2023 Mineral Resource calculation have increased a respective 25% and 18% relative to that utilized in the 2019 FS, as a result of global inflation and realized costs achieved to-date.
• Expanded Mineral Reserve Base: Total gold content of Proven and Probable mineral reserves now stand at 2.4Moz, which factoring for mine depletion to the end of Q1-2023, marks a 37% increase relative to the 1.8Moz outlined in the 2019 FS. The increase in mineral reserves is supported by over 100,000m of additional drilling.
• Increased Mill Throughput: The 2019 FS was based on an initial oxide mill design throughput of 5.2Mtpa, reducing to 3.0Mtpa upon the commissioning of a partially integrated 2.2Mtpa hard rock mill in Year 3. In contrast, the 2023 Study maintains the current 5.9Mtpa oxide mill throughput but envisions the commissioning of an independent and upsized 4.4Mtpa hard rock plant in Year 3 (2025).
  
  Overall, expanded mill throughput of 10.3Mtpa under the 2023 Study is 98% higher than the 5.2Mtpa throughput outlined in the 2019 FS.

• Reduced Hard Rock Leach Time: Additional metallurgical test work conducted in 2023 confirmed a 24hr leach time versus the 48hr leach time utilized in the 2019 FS. The faster leach kinetics contributes to lower capital and operating costs, and further de-risks project execution as the hard rock Carbon-in-Leach (“CIL”) circuit will duplicate the existing oxide CIL circuit.
• Expanded Production Profile: The expanded mineral reserve base and increased annual mill throughput have led to higher LOM and annual gold production. At the full processing rate of 10.3Mtpa, the 2023 Study outlines an average production profile of 209,000oz/yr over the first 8 years, a 70% increase relative to the 123,00oz/yr in the 2019 FS.
  

MINERAL RESOURCE AND MINERAL RESERVE

Gold mineralization on the Property is predominantly hosted in the Bomboré Shear Zone, a major structure within a 50km long northeast-southwest trending greenstone belt. The updated mineral resource estimate has an effective date of March 28, 2023 and was completed by P&E Mining Consultants Inc. The updated mineral resource is based on a total of 601,795m of drilling, and excludes material mined up to the effective date, as well as excluding stockpiles.

Table 2 – Bomboré Mineral Resource Estimate as of March 28, 2023

The updated mineral reserve estimate was completed by AMC with an effective date of March 28, 2023. Orezone developed new re-blocked mine models for each of the resource block models accounting for internal dilution and mining recoveries. AMC applied appropriate modifying factors for conversion of mineral resources to mineral reserves. Those factors include amongst others, weathering profiles, operating costs, and pit slope angles. Cut-off grade determinations for block assignments (ore versus waste) were based on a gold price of $1,500/oz. Mine planning included standard procedures of optimization, design and scheduling.

Table 3 – Bomboré Mineral Reserve Estimate as of March 28, 2023

MINE PLAN AND PRODUCTION SUMMARY

The 2023 Study is based on an annual ore feed rate of 10.3Mtpa with delivery of higher-grade ore in the earlier years. The open pit operation will continue with mining contractors utilizing backhoe excavators and rear-dump haul trucks. The pit design is based on 6m benches in oxide ore to be mined in two 3m flitches with berm widths varied according to the recommended geotechnical parameters. In hard rock ore, mining will take place on 3m flitches stacked to 12m in the final pit walls. The oxide material is soft and free digging with minimal blasting while the hard rock material will be mined using conventional drill and blast mining methods. Mining rate will peak at 30Mt per year.

Multiple open pits will be mined over a strike of 14km which provides flexibility in ore scheduling. The mine plan was developed to satisfy physical and practical constraints including consideration for access to new mining areas, a sustainable production profile, limits on vertical advance rates and practical use of low-grade ore stockpiling. The high-grade P17S pits have been prioritized and will be mined from 2025 to 2028. The LOM strip ratio is 1.96:1 with waste placed either in dumps or used in tailings facility construction.

Figure 3 – Mining Schedule (starting Q2-2023)

MINERAL PROCESSING

The Bomboré oxide plant is currently processing material at a rate of 5.9Mtpa which is 0.7Mtpa above nameplate design. From the truck dump hopper, the soft oxide and upper transition ore is introduced into a mineral sizer via an inclined apron feeder and then fed by conveyor into a single stage 3.2MW ball mill in closed circuit with hydrocyclones to produce a grind size of 80% passing 125µm. The CIL leach residence time is 21 hours. Gold recovery is 92% for oxide ore and 89% for upper transition ore.

The new 4.4Mtpa hard rock plant is designed to process fresh and lower transition material to achieve a grind size of 80% passing 75µm. Metallurgical test work conducted in 2023 has concluded that the optimal grind size is 80% passing 75µm and that gold recovery is independent of head grade. With oxygen addition, a 24-hour leach time is sufficient. Gold recovery is 86% for lower transition ore, 95% for P17S ore, 84% for P8P9 fresh ore, and 82% for all other fresh ore.

The new comminution circuit will include a primary jaw crusher, a 24-hour crushed ore stockpile, a single stage 18MW twin pinion SAG mill, hydrocyclones for product size classification and space for a potential future pebble crusher. Cyclone overflow will report to trash removal screens and then into a 29m diameter thickener. The slurry will be thickened to 45% solids and pumped to the CIL circuit. The new CIL circuit will be identical to the existing CIL circuit and will include an oxygen plant. Carbon will be processed in a new 12-tonne carbon elution circuit and the existing carbon kiln will be utilized for carbon regeneration. Two new electrowinning cells will be installed and the existing gold room and refinery will be used to produce gold doré bars.

Extensive metallurgical test work has been completed on Bomboré ore to confirm plant design parameters. The most recent testing of fresh ore characterization and gold recovery was completed by Maelgwyn Mineral Services Africa in Q1-2023. Comminution test work data has been compiled from a total of 42 Axb tests and 43 BWi tests and Orway Mineral Consultants have provided recommendations on the design of the grinding circuit.

Figure 4 – Processing Schedule (starting Q2-2023)

Figure 5 – Existing 5.9Mtpa Oxide Plant and New 4.4Mtpa Hard Rock Plant Layout

Figure 6 – 4.4Mtpa Hard Rock Plant Flowsheet

PROJECT INFRASTRUCTURE

The Bomboré Mine benefits from a strong mining culture and excellent local infrastructure. Burkina Faso also has an expanding pool of available mining contractors, suppliers, and skilled labour. In addition, the mine is favourably situated only 85km from the capital city of Ouagadougou, accessed by a 5km all-weather road connecting to the main sealed highway (RN4) that runs between the capital and the coast. In addition, construction of the neighbouring Kiaka Mine is underway and Bomboré is expected to benefit from synergies including the use of common contractors.

Resettlement Action Plan ("RAP")

RAP Phases II and III follows the successful completion of Phase I RAP and involves the construction of three new resettlement villages (MV3, MV2, and BV2). Phase II is well-advanced with the construction of MV3 sequenced as the first village to construct in order to gain access to mining areas that are currently contemplated in the 2024 mine plan. MV3 is the largest of the resettlement villages and requires the erection of over 1,200 private homes and public structures.

A RAP Phase IV is planned to accommodate an increased footprint to the mining lease and includes the resettlement of approximately 330 households. This resettlement will be performed progressively over 2024 through to 2027.

Tailings Storage Facility

The existing tailings storage facility is fully lined with a pump out decant system. The facility is designed to be raised in stages over the mine life with downstream embankment construction techniques using run-of-mine waste rock. The capacity of the tailings storage facility will be expanded from 70Mt to 128Mt, which is sufficient for the current mineral reserves plus future potential.

Power Supply

The project to connect Bomboré to Burkina Faso’s national grid is progressing well and remains on schedule for completion before the end of 2023. ECG Engineering Pty Ltd. (“ECG”) is managing the design, construction, and commissioning of the new high voltage transmission line and dedicated substations, and has been working closely with SONABEL, Burkina Faso’s state-owned electricity company, to ensure timely deliverables and adherence to schedule. ECG is a specialized engineering firm that has successfully delivered on similar projects in West Africa, including Burkina Faso. All major equipment and materials have shipped, and installations are progressing on schedule.

Water Supply

Raw water is currently sourced from the seasonal Nobsin River and diverted by a weir into an existing 5.2Mm³ off-channel reservoir (“OCR”). A pit in the P8P9 orebody has been selected for early excavation to serve as a second 1.8Mm³ reservoir which will store sufficient water for the expanded plant throughput.

PROJECT ECONOMICS

Operating Costs

The life of mine AISC is estimated at $1,122/oz using a base case gold price of $1,750/oz and a USD to XOF exchange rate of 600. Electrical grid power is projected to reduce energy costs to $0.21/kWh from the current $0.62/kWh which is based on diesel generation. Contract mining has been selected as the basis for open pit mining activities, to be managed by the Bomboré operation team, and costs are based on contractor proposals. Processing cost estimates are life of mine averages and include various annual blends of oxide, transition and fresh ores as mill feed, incorporating the associated reagent consumptions, work indices, abrasion indices, and power requirements.

Table 4 – Operating Costs Summary (Oxide & Hard Rock)

Hard Rock Expansion Project Capital Costs

The capital cost of the Phase II Expansion Project is estimated at $167.5M. The capital cost estimate was compiled by Lycopodium and is based on Q3-2023 pricing. The estimate is deemed to have an accuracy of ±15%.

Table 5 – Hard Rock Plant Expansion Capital

Sustaining Capital Costs

Sustaining capital costs include ongoing tailings storage facility raises, haul road extensions, grade control drills, and mine dewatering and surface water management equipment.

Closure cost includes the remediation work required to return the site to meet all conditions of the Environmental and Social Impact Assessment.

Table 6 – Sustaining Capital & Closure Costs (Oxide & Hard Rock)

Growth Capital Costs

Growth capital includes the grid power connection project that will be completed in Q4-2023, RAP Phases II & III, that are currently underway and will be completed in 2024, and RAP Phase IV that will be performed progressively over 2024 through to 2027.

Table 7 – Growth Capital

Economic Analysis

Table 8 – Simplified Financial Model (Base Case Gold Price of US$1,750/oz, 100% basis)