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| | Corporate Profile: Orezone Resources Inc
Publisher: Kaiser Research Online
Author: Copyright 2013 John A Kaiser
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Orezone Resources Inc (OZN-T)
| Orezone was an explorer and emerging gold producer under the leadership of president Ron Little whose main asset was Essakane, the largest gold deposit in Burkina Faso, containing 4.0 million ounces of indicated resources and 1.3 million ounces of inferred resources at a 0.5g/t cut-off. An updated feasibility study in May 2008 forecast 3 million ounces of recoverable gold reserves from a 20,000 TPD operation producing for nine years at a cash cost of $385 including royalties, with initial capital expenses of $420 million. Orezone also has a pipeline of projects located in politically stable areas of West Africa. In December 2008, with the share price languishing in the fifteen-cent range as the company struggled to secure construction funding for Essakane,a friendly takeover by Iamgold Corp. was announced where Iamgold would acquire Essakane and Orezone shareholders would receive 0.08 of a common share of Iamgold plus 0.125 of a share of the new exploration company created to hold the balance of Orezone's projects, Orezone Gold Corporation, for each Orezone share held. Upon the closing of the transaction the value of the Iamgold share was $.77 per Orezone share, for a total of $281 million on a fully diluted basis. |
Key to Understanding IPV Charts and Spec Value Hunter Tables
| An IPV Chart is a graphical presentation of a Spec Value Hunter table that has been constructed according to the Rational Speculation Model developed by John Kaiser. The IPV Chart allows speculators to identify which projects offer poor, fair or good speculative value in both absolute and relative terms. The speculative value depends on the project stage, the project's implied value as calculated by the company's fully diluted capitalization, stock price and net project interest, and the dream target deemed appropriate for the project. A dream target is what a project would be worth in discounted cash flow terms once in production. |
| Green background indicates the dream target judged appropriate for this play by John Kaiser - otherwise unranked. |
Poor Speculative Value -   |
Fair Speculative Value -  |
Good Speculative Value -   |
| Note: narrow arrows indicate IPV is outside the fair value channel but within 25% of the fair value limits |
| Click on the company name to view the company profile, the project name to view project details. |
| Click on the project icon if its background is shaded to get the IPV Chart for that company. |
| Essakane |  | 100% WI | Burkina Faso | 8-Construction |
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| Essakane 43-101 Economic Study (USD except where noted otherwise) |
| FSU | May 1, 2008 |
| Gmining | Essakane |
| Mining Scenario | TR | Mining Costs |
| Mining Type: | OP |
| Cost Currency: | USD |
| Processing Type: | CIL |
| Capital Cost: | $420,444,184 |
| Operating Rate: | 20,000 tpd |
| Sustaining Cost: | $26,003,000 |
| Operating Days: | 365 |
| Operating Cost: | $18.25/t |
| Strip Rate: | 3.1 |
| BC Cash Cost per Unit: USD | $430/oz Au |
| Mine Life: | 9 years |
| BC Cash Cost Net By-Products: USD | $430/oz Au |
| LOM Tonnage: | 58,120,000 t |
| BC All-In Cost Net By-Prod: USD | $581/oz Au |
| Est Startup: | e 2010, Q1 |
| Spot All-In Cost Net By-Prod: USD | $581/oz Au |
| Production Potential |
| Metal 1 | Metal 2 | Metal 3 | Metal 4 |
| Metal: | Au |
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| Grade: | 1.67 g/t |
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| Recovery: | 95.0% |
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| Annual Output: | 310,000 oz |
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| LOM Output: | 2,960,000 oz |
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| Base Case Price: | $800/oz |
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| Spot Price: | $1,315/oz |
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| Base Case NSR: | $33.97/t |
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| Spot NSR: | $55.84/t |
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| Base Case Valuation |
| Reported Valuation Currency: | USD |
| Pre-Tax NPV: |
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| Discount Rate: | 5% |
| After-Tax NPV: | $372,751,000 |
| Total Base Case NSR USD: | $33.97/t |
| Pre-Tax IRR: |
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| Total Spot NSR USD: | $55.84/t |
| After-Tax IRR: | 21% |
| Annual Pre-Tax Cash Flow Base Case and Net CF/FDSH USD: | $114,775,000 | $0.31 | Pre-Tax Payback: |
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| Annual Pre-Tax Cash Flow Spot and Net CF/FDSH USD: | $274,440,500 | $0.76 | After-Tax Payback: | 3.4 y |
| Enterprise Value CAD : | $298,258,558 | $.83/sh | Share Price: | $0.78 |
| Note: |
| Comparative Valuations using Life of Mine Averages |
| Discount Rate: | 0% | 5% | 10% | 15% |
| Base Case Pre-Tax NPV USD: | $586,527,816 | $356,971,402 | $203,553,341 | $98,633,212 |
| Base Case Pre-Tax Net NPV/Sh USD: | $1.64 | $1.00 | $0.57 | $0.28 |
| Premium BC PT NPV over EV: | $0.99 | $0.35 | ($0.08) | ($0.37) |
| Spot Pre-Tax NPV USD: | $2,023,517,316 | $1,437,803,690 | $1,039,478,266 | $761,117,849 |
| Spot Pre-Tax Net NPV/Sh: | $5.65 | $4.02 | $2.90 | $2.13 |
| Premium Spot PT NPV over EV USD: | $5.01 | $3.37 | $2.26 | $1.48 |
| The comparative NPV calculations assume constant annual cash flow based on the life of mine average annual payable production and CapEx spent in year one. The operating cost includes the LOM sustaining capital. Due to details such as ore scheduling these NPV figures may differ from those of the 43-101 economic study. |
| After-Tax Valuations using Spot By-Product Prices |
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| Essakane 43-101 Economic Study (USD except where noted otherwise) |
| FS | Sep 17, 2007 |
| | Essakane |
| Mining Scenario | TR | Mining Costs |
| Mining Type: | OP |
| Cost Currency: | USD |
| Processing Type: | CIL |
| Capital Cost: | $346,500,000 |
| Operating Rate: | 15,000 tpd |
| Sustaining Cost: | $17,700,000 |
| Operating Days: | 365 |
| Operating Cost: | $11.89/t |
| Strip Rate: | 3.1 |
| BC Cash Cost per Unit: USD | $223/oz Au |
| Mine Life: | 9 years |
| BC Cash Cost Net By-Products: USD | $223/oz Au |
| LOM Tonnage: | 46,400,000 t |
| BC All-In Cost Net By-Prod: USD | $368/oz Au |
| Est Startup: |
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| Spot All-In Cost Net By-Prod: USD | $368/oz Au |
| Production Potential |
| Metal 1 | Metal 2 | Metal 3 | Metal 4 |
| Metal: | Au |
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| Grade: | 1.78 g/t |
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| Recovery: | 96.5% |
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| Annual Output: | 292,000 oz |
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| LOM Output: | 2,507,000 oz |
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| Base Case Price: | $650/oz |
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| Spot Price: | $1,315/oz |
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| Base Case NSR: | $34.67/t |
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| Spot NSR: | $70.14/t |
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| Base Case Valuation |
| Reported Valuation Currency: | USD |
| Pre-Tax NPV: | $273,088,000 |
| Discount Rate: | 5% |
| After-Tax NPV: |
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| Total Base Case NSR USD: | $34.67/t |
| Pre-Tax IRR: | 20% |
| Total Spot NSR USD: | $70.14/t |
| After-Tax IRR: |
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| Annual Pre-Tax Cash Flow Base Case and Net CF/FDSH USD: | $124,702,250 | $0.34 | Pre-Tax Payback: |
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| Annual Pre-Tax Cash Flow Spot and Net CF/FDSH USD: | $318,896,850 | $0.89 | After-Tax Payback: |
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| Enterprise Value CAD : | $298,258,558 | $.83/sh | Share Price: | $0.78 |
| Note: |
| Comparative Valuations using Life of Mine Averages |
| Discount Rate: | 0% | 5% | 10% | 15% |
| Base Case Pre-Tax NPV USD: | $758,120,250 | $500,840,609 | $327,579,225 | $207,950,553 |
| Base Case Pre-Tax Net NPV/Sh USD: | $2.12 | $1.40 | $0.92 | $0.58 |
| Premium BC PT NPV over EV: | $1.47 | $0.75 | $0.27 | ($0.07) |
| Spot Pre-Tax NPV USD: | $2,505,871,650 | $1,815,412,597 | $1,344,280,431 | $1,013,703,449 |
| Spot Pre-Tax Net NPV/Sh: | $7.00 | $5.07 | $3.76 | $2.83 |
| Premium Spot PT NPV over EV USD: | $6.35 | $4.43 | $3.11 | $2.18 |
| The comparative NPV calculations assume constant annual cash flow based on the life of mine average annual payable production and CapEx spent in year one. The operating cost includes the LOM sustaining capital. Due to details such as ore scheduling these NPV figures may differ from those of the 43-101 economic study. |
| After-Tax Valuations using Spot By-Product Prices |
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