Feasibility Study Reveals 'Attractive' Gold Project

In a July 4 research note, analyst Eric Zaunscherb reported that Canaccord Genuity raised its target price on Orezone Gold Corp. (ORE:TSX) to CA$1.50 per share from CA$1.40. This represents a 127% projected return from the company's current share price of CA$0.64.

This change resulted from Canaccord Genuity updating its model on Orezone in accordance with the recently released feasibility study on Bomboré. The study confirmed that the Burkina Faso gold project, 90% of which Orezone owns, is "robust" as expected, which should help the company in its pursuit of project financing.

Specifically, Zaunscherb relayed, the feasibility study outlines a first pour from stage one oxide ore taking place in late 2021, with commissioning and ramp-up to commercial production of 5,200,000 tons (5.4 Mt) per year in Q1/22. The study indicates greater gold production than anticipated, which should result from the capture of higher-grade oxide and sulphide.

A stage 2 sulphide circuit will be built through 2023, with which 2.2 Mt per year of material can be added to the annual 5.2 Mt. "The stage 2 plant allows Orezone to wrap arms around transition and sulphide ore to expand reserves, throughput and mine life while also increasing grade," Zaunscherb noted.

The feasibility study also shows initial capex to be better than expected, at US$153 million versus US$225 million. This results from shifting more of it, US$63 million instead of US$20 million, to the expansion in year three, at which time capex could be funded through cash flow.

Zaunscherb added that Orezone's "management has done an excellent job optimizing the project and providing rich detail ahead of the NI 43-101 technical report filing due within 45 days."

Also, he pointed out that Orezone is currently trading at a "significant" discount to its peers. "We look for a rerating to alleviate these discounts in the wake of the delivery of the positive updated feasibility study near term and in anticipation of clarity on financing alternatives."

Canaccord Genuity has a Buy rating on this Canadian exploration and development company.

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Disclosures from Canaccord Genuity, Orezone Gold Corp., July 4, 2019

Analyst Certification: Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst's coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research.

Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons of Canaccord Genuity Inc. and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

The authoring analysts who are responsible for the preparation of this research have received (or will receive) compensation based upon (among other factors) the Investment Banking revenues and general profits of Canaccord Genuity. However, such authoring analysts have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Investment Banking activities, or to recommendations contained in the research.

Required Company-Specific Disclosures (as of date of this publication)
Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking services from Orezone Gold Corporation in the next three months.

Disclosures are available here.