Orezone Gold Corp. [ORE-TSXV; ORZCF-OTC] is raising $20 million after an underwriting syndicate agreed to purchase 37.1 million units of the company at 54 cents per unit on a bought deal basis.
Proceeds are earmarked for Orezone’s 90%-owned Bombore Project, which ranks as one of the largest undeveloped gold deposits in Burkina Faso, West Africa.
Each unit consists of one common share of the company and one-half of one common share purchase warrant entitling the holder to acquire one common share at 80 cents each for a period of 36 months after the closing date.
Under an agreement with the underwriting syndicate led by Canaccord Genuity Corp. and PI Financial Corp., the underwriters have been granted a green shoe option to acquire up to an additional 5.56 million units at 54 cents each, a move that would generate additional proceeds of just over $3 million.
The green shoe option can be exercised at any time up to 30 days after the closing date.
On Wednesday, Orezone shares fell 10.3% or $0.06 to 52 cents on active volume of 1.21 million. The shares currently trade in a 52-week range of 39 cents and 88 cents.
Bombore is situated 85 km east of the capital city of Ouagadougou and is accessible via a paved international highway.
Back on June 26, 2019, the company announced an updated feasibility study, which outlines a long-life, low cost open pit gold mine. Initial construction costs are estimated at $153 million.
The project hosts a large oxide resource underlain by a larger, open sulphide resource, and will be developed in two stages to reduce project costs. Development has commenced on the project with the first gold pour scheduled for the second half of 2021.
The project includes a measured and indicated resource of 5.1 million ounces, grading 0.69 g/t gold. That includes reserves of 1.8 million ounces at a grade of 0.81 g/t gold.
That material is expected to sustain an open pit mining operation for 13 years, producing at an annual rate of 117,760 ounces gold. Life-of-mine cash costs are estimated to be US $681/oz. The life-of-mine all-in sustaining cost (AISC) is forecast to be US $730/oz.
Gold resources at the site occur at surface in several zones contained within a gold-in-soil anomaly that extends virtually uninterrupted at a level of plus 0.1 g/t for 14 km and represents the largest gold-in-soil anomaly in the country.
Approximately 40% of the total resource occurs in the shallow weathered horizon (average depth about 45 metres) and economic pit shells that constrain the resource can reach depths of up to 200 metres.
The company plans to develop the project in stages with Stage 1 focused on the Free Dig shallow oxide reserves as a carbon-in-leach (CIL) operation with no crushing and minimal grinding with average recoveries of 87%.
Stage two will focus on underlying higher-grade sulphides with a separate crushing and grinding circuit feeding the same CIL circuit as the oxides.
Meanwhile, the bought deal financing announced on Wednesday January 8 is expected to close by January 29, 2020.