Gold analysts are pointing to substantial ranges of pent-up demand for mergers and acquisitions (M&A) exercise within the mid-tier and rising producer house within the coming months because the world emerges from the pandemic disaster and other people can conduct bodily due diligence once more.
One of many scorching picks tipped for acquisition is Orezone Gold (TSXV: ORE, US-OTC: ORZCF) and its Bomboré gold growth mission in Burkina Faso.
Whereas the key gold producers have largely accomplished as a lot consolidation as doable and are actually sporting diversified, sustainable manufacturing profiles, the producers want to fill reserve depletion organically, specializing in brownfields exploration, or choosing up single-asset growth tasks as doubtlessly the likes of Bomboré.
The market has seen a number of of those strategic tie-ups in latest months, together with the acquisition by Newmont (TSX: NGT; NYSE: NEM) of GT Gold and its Tatogga mission in British Columbia. Additional afield, we’ve seen majors extract improved efficiencies by buying complementary belongings, equivalent to Newmont and Barrick Gold (TSX: ABX; NYSE: GOLD) forming a three way partnership in Nevada in July 2019 – Nevada Gold Mines – the place each miners generate a considerable portion of their manufacturing from a number of belongings.
One space that has seen a increase in gold exploration, growth and mining exercise is West Africa. Latest exercise consists of Barrick promoting its undeveloped open-pit Massawa mission in Senegal to Teranga Gold (TSX: TGZ) late in 2019. The latter deal opened the numerous potential for working synergies between Teranga’s producing Sabodala mine, solely 20 km from Massawa.
Australia-based West African Assets (ASX: WAF) lately introduced the acquisition of the 1.1 million oz. Toega gold mission from B2Gold (TSX: BTO; NYSE: BTG), because it goals to extend Sanbrado’s gold manufacturing and mine life. Toega is positioned inside trucking distance of Sanbrado.
However West Africa stands out among the many world’s jurisdictions as notably supportive of mineral exploration, mine growth and mining, in response to Orezone Gold’s CEO Patrick Downey.
Orezone has lately kicked off development of its totally funded US$189 million Bomboré gold mission in Burkina Faso, through which it owns a 90% stake.
“Tasks in West Africa have an extended historical past of being constructed forward of schedule and underneath price range,” Downey says in an interview.
Based on him, about 11 latest mining tasks in West African jurisdictions had been accomplished both on or forward of schedule and on or underneath price range, one thing that makes them more and more interesting to buyers.
The important thing, in response to Downey, is that considerably all the latest tasks accomplished in Burkina Faso had been constructed by engineering, procurement, and development administration (EPCM) contractor Lycopodium Minerals. Because of this, it has additionally awarded the Bomboré EPCM contract to Lycopodium in January.
“With greater than 12 mines inbuilt West Africa, Lycopodium’s monitor report of constructing environment friendly mines on time and price range is unparalleled. Lycopodium may be very accustomed to Bomboré, having carried out the 2018 feasibility research, the 2019 up to date feasibility research, and the beforehand accomplished front-end engineering and design,” says Downey.
Lycopodium has a demonstrated monitor report in Burkina Faso, lately delivering profitable EPCM gold tasks on the two million oz. per 12 months Sanbrado mission for West African Assets, adjoining to Bomboré, the three million oz. per 12 months Houndé mission for Endeavour Mining, and the two.5 million oz. per 12 months Wahgnion mission for Teranga Gold Company. Considerably, Lycopodium has simply accomplished the three.3Mtpa Yaouré mission for Perseus Mining in Côte d’Ivoire, forward of schedule and underneath price range through the covid pandemic.
Final 12 months, OreZone launched a feasibility research for Bomboré, which outlined a staged oxide-sulphide mission producing a mean of 117,800 oz. of gold yearly at all-in sustaining prices of US$730 per ounce.
The Bomboré gold mission is host to a complete oxide reserve of 52.5 million tonnes at 0.69 gram gold per tonne for 1.2 million contained oz. with extra sulphide reserves of 17.6 million tonnes grading 1.19 grams gold per tonne for a complete of 675,000 ounces. These are contained inside a measured and indicated useful resource stock of 107 million tonnes of oxides at 0.55 grams gold and 123 million tonnes of sulphides at 0.8 grams gold.
The related preliminary capital for the oxide portion of the mission was estimated at US$153 million, with a further US$63 million allotted for the sulphide enlargement commencing operations within the third 12 months. At a 5% low cost price, the related internet current worth has been estimated at US$361 million with a 43.8% inner price of return.
Orezone is planning on pouring first gold from Bomboré within the second half of subsequent 12 months.
On January 21, Orezone introduced it had secured a financing package deal totalling US$182 million and consisting of US$96 million in senior secured loans, a US$35 million convertible notice, and a US$51 million bought-deal fairness providing to fund Bomboré into manufacturing totally.
The finance package deal has allowed Orezone to quickly advance crucial objects on its to-do record, together with ordering long-lead objects such because the ball mill in parallel with beginning website earthworks.
Downey expects the primary concrete pours to happen in June, which in response to the so-called Lassonde Curve, ought to precipitate the beginning of a company rerating and a couple of 125% rise in fairness values as the corporate enters the development part correct.
Based on Downey, the development milestones set the stage of a coveted fairness rerating because the mission advances nearer to manufacturing and ever extra interesting within the eyes of potential suitors.
“M&A exercise takes place when a selected set of circumstances are met, together with timing. However extra importantly, buyers are on the lookout for clear tasks as a result of they don’t need future worth capped by means of dilutive development finance packages or by the proponent promoting future steel streams.
“I believe West Africa – and hopefully Bomboré – shall be a part of future M&A as a result of single asset corporations hardly ever make for nice enterprise propositions,” he says. “However earlier than we’d take into account any sort of transaction, we first wish to display the expansion potential of the asset.”
For Orezone to entry all areas inside the Bomboré mining allow required for the method plant, floor infrastructure, tailings storage facility, and off-channel reservoir, Orezone needed to relocate a whole village.
The corporate constructed over 1,100 personal houses, public buildings, and neighborhood roads and moved over 370 households into their new houses.
Based on Downey, with that important social funding now full, it opened up new potential areas for exploration, which is a key worth driver.
“One in every of our prime priorities n 2021 is to start out exploratory drilling on high-priority oxide and sulphide targets to increase Bomboré enlargement potential,” he says.
To this finish, the corporate has bought 50% of the silver by-product manufacturing to EURO Assets, a 90%-owned affiliate of Iamgold (TSX: IMG; NYSE: IAG). The streaming deal gave OreZone US$7.15 million in exploration funding in alternate for at least 37,500 oz. silver from the mine, capped at 375,000 ounces.
“We imagine the silver stream is a sexy non-dilutive supply of capital to fund exploration on high-priority oxide and newly recognized high-grade sulphide targets throughout development. As a result of lack of complete silver assays, no silver manufacturing was included within the 2019 feasibility research for Bomboré,” says Downey.
The Bomboré mission spans over 13 km and is but to be totally outlined. A number of remoted mineralized zones are believed to be steady however haven’t been drilled sufficiently to substantiate such continuity. Two such zones recognized as excessive precedence drill targets are the P17 sulphide zone and the hanging wall oxide zone at Maga.
For the P17 sulphide zone, latest drilling has outlined high-grade sulphide assets at P17S with grades greater than double that of the general common grade for the mission. Drilling simply north of the P17S reserve pit signifies that the deposit remains to be open and trending in the direction of the floor at P17, located 1.2 km to the north. Historic drilling at P17 has returned wonderful intercepts, and a sizeable untested hole exists between these two areas. Future drilling is deliberate to infill this massive, underexplored space.
For Maga, oxide targets within the hanging wall had been beforehand inaccessible earlier than relocating households to their new resettlement villages. Restricted earlier drilling and auger drilling and historic artisanal gold workings exterior of present reserve pits present a robust indication that the mineralized constructions internet hosting the present reserves show good lateral continuity and are extremely potential to order enlargement.
As well as, high-grade sulphide inferred mineralized zones are current straight under or alongside strike of a number of sulphide pits within the present mineral reserves. The earlier drilling means that these zones are huge and steady at Siga South, the place the sulphide zone definition drilling is most superior. The corporate has recognized three main goal areas (Maga, Siga South, and Siga East) for sulphide useful resource drilling that warrant future exploration.
Bomboré additionally has 14,547 hectares of exploration claims surrounding its mining allow, with quite a few potential targets which have been recognized, together with the KT and P13 prospects positioned to the northeast and the southwest of the mining allow, respectively.