Orea secures 100% of French gold deposit, shares up 54%
Orea Mining Corp. [OREA-TSX, OREAF-OTCQX, 3CG-FRA] shares rose sharply Wednesday after the company said it has secured a 100% interest in the Montagne d’Or gold deposit in French Guiana by acquiring the 55.01% interest held by United Kingdom-based Nord Gold SE [NORD-LSE].
Montagne d’Or is a permitting-stage open pit gold mining project that hosts proven reserves of 8.25 million tonnes at 1.99 g/t (530,000 ounces gold gold) and probable reserves of 45.87 million tonnes at 1.50 g/t (2.2 million ounces of gold).
The shares jumped 54% or $0.035 to 10 cents on volume of 2.5 million after Orea said it had signed a legally-binding letter of agreement with Nord Gold. The shares are currently trading in a 52-week range of 31 cents and $0.04.
“This agreement is very accretive to Orea shareholders,’’ said Orea Chairman Robert Giustra. “Orea previously owned 45% of a gold project with a net present value of US$370 million, based on a US$1,200 gold price for calculating reserves, and US$1,300 for calculating resources,” he said.
“Orea has now signed a deal to control 100% of that project, and is planning to carry-out updated economic studies with current inputs, to determine what will certainly be a much higher NPV at significantly higher current gold prices of US$1,700.”
Under the terms of the agreement, there are no up-front payments, Orea said. Consideration is entirely at the back end, whereby Orea will only be obligated to pay Nordgold $100 million when Orea receives all permits and authorizations necessary for construction of a mine that produces a minimum of 100,000 ounces of gold annually.
“If Nordgold’s shareholders are still under sanctions at the time of the $100 million payment, then the funds will be paid to a blocked bank account,’’ Orea said.
In addition, the company has reported the departure of President and CEO Rock Lefrancois. “Mr Lefrancois recognized that the foreseeable months ahead for Orea would be focused on legal engagement and government matters, rather than on geological and mining endeavours that he can provide more value on.’’
Also, Orea said it is not pursuing closure of additional tranches of the $1 million private placement on June 13, 2022. A first tranche of $215,000 closed on June 17, 2022. “Given the recent development of the acquisition of 100% of Montagne d’Or, Orea management believes that it can complete financing on more favourable terms, and intends to announce another private placement in the near future.’’
Meanwhile, Orea is awaiting a decision by the Supreme Court of France regarding the renewal of the Montagne d’Or mining titles.
The deal with Nord Gold has been announced after Orea recently released a new design plan that aims to reduce the environmental impact of extracting its Montagne d’Or gold deposit.
In response to public debate, Orea said it has selected a new project design based on “Best Available Techniques,” resulting in a 32% reduction in surface footprint and 80% reduction in estimated total equivalent C02 emissions.