{"id":2323,"date":"2011-12-12T19:52:22","date_gmt":"2011-12-13T00:52:22","guid":{"rendered":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=2323"},"modified":"2017-11-19T19:14:26","modified_gmt":"2017-11-20T00:14:26","slug":"africa-the-key-to-orezones-future","status":"publish","type":"post","link":"https:\/\/www.cusjc.ca\/ottawainsight\/?p=2323","title":{"rendered":"Africa the key to Orezone’s future"},"content":{"rendered":"

For Orezone Gold Corp., an Ottawa-based exploration company, 2012 is going to be all about the Bombor\u00e9 gold project. <\/span><\/p>\n

Located in a small town in Burkina Faso, Bombor\u00e9 is the largest undeveloped gold deposit in the country and Orezone is wasting no time or resources in developing a feasible gold mine from the deposit.<\/p>\n

According to its third quarter report ended September 2011, Orezone spent $6.6 million in exploration and project development on Bombor\u00e9, compared to $345,405 during the same quarter the previous year.<\/p>\n

\u201cWe are now about three-quarters of the way through it and the results have been very positive to date.\u201d<\/p>\n

Orezone is relying on an aggressive exploration program to see how much gold there is in the ground, which in turn has pushed its drilling and assaying costs up to $4.9 million from $292,268 last year.<\/p>\n

George McTaggart, vice president of corporate development at Orezone, says success in 2010 helped the company increase its drilling activities.<\/p>\n

\u201cFinding more gold and raising more money allowed us to fund a 170,000 meter drill program,\u201d. says McTaggart.<\/p>\n

\u201cWe are now about three-quarters of the way through it and the results have been very positive to date.\u201d<\/p>\n

RESULTS MEAN MONEY<\/strong><\/p>\n

When the company released a resource update in October 2010, investors reacted positively to the news that there were potentially 3.5 million ounces of gold in the ground at Bombor\u00e9, and drive its share prices up from $0.75 per share to $3.25 per share in a matter of weeks.<\/p>\n

This allowed Orezone to raise an additional $54 million of financing in December 2010.<\/p>\n

\u201cThe question then becomes, could that five million ounces go to 10 or more? That\u2019s when things will get really interesting.\u201d<\/p>\n

McTaggart says he hopes that the next resource update, which is due to be completed in early 2012 after the drilling program is complete, could indicate there are as many as five million ounces in the deposit.<\/p>\n

In context, a small gold mining company would have one million ounces of gold or less and a large company will have 10 million ounces.
\nOrezone is somewhere in between.<\/p>\n

\u201cThe question then becomes, could that five million ounces go to 10 or more?\u201d McTaggart says.\u00a0 \u201cThat\u2019s when things will get really interesting.\u201d<\/p>\n

This is somewhat of a d\u00e9j\u00e0 vu moment as Orezone went through a similar situation years ago.<\/p>\n

In 2002 the company made headlines when it bought out its partner on the Essakane project in Burkina Faso for $200 million dollars, then expanded the deposit to 5 million ounces and took the project through to construction.<\/p>\n

Today, Essakane is the largest gold mine in the country, producing 400,000 oz of gold per year.<\/p>\n

When the stock markets crashed in the fall of 2008, Orezone was caught in a financial squeeze and ended up being acquired by IAMGold, one of the largest gold-producers,. in December 2008 for $350 million.<\/p>\n

Some predict Bombor\u00e9 may follow the same path as Essakane.<\/p>\n

Nicholas Campbells, a financial analyst with Canccord Genuity said in a report released September 2011, \u201cWe view the company as a likely takeover target for a larger cap producer.\u201d<\/p>\n

McTaggart says it\u2019s very common for large companies to acquire gold deposits from junior companies.\u00a0 \u201cSmaller companies are better at finding deposits, and larger companies are generally better at developing them into mines because they have more money and resources.<\/p>\n

\u201cIt\u2019s not our intent to be bought out but when you have a deposit that could be as big as this, a lot of people think it\u2019s inevitable ,\u201d he says.<\/p>\n

STAYING ON TRACK<\/span><\/strong><\/p>\n

Although Orezone is confident in Bombor\u00e9, there are still challenges.<\/p>\n

\u201cWe tend to emphasize that gold is a safe place to be during these uncertain times, and then remind them of the key attributes of our project and the timelines.\u201d<\/p>\n

McTaggart says the biggest challenge in 2012 is staying on schedule and making sure all activities are done on time.<\/p>\n

He says another challenge is ensuring that Orezone\u2019s financial position is strong enough to get them to the next stage.<\/p>\n

In the current state of the world economy, McTaggart tries to communicate the stability of gold in uncertain times.<\/p>\n

\u201cWe tend to emphasize that gold is a safe place to be during these uncertain times, and then remind them of the key attributes of our project and the timelines,\u201d he says.<\/p>\n

Historically, gold has been relied on as a standard currency.<\/p>\n

\u201cIn the kind of world situation in which we now find ourselves; that is a collapsing debt bubble of about $210 trillion worldwide, which is leading to currency collapses, gold takes on its historic role as money of last resort. It is the ultimate money,\u201d says Ian Gordon, investment analyst and president of Longwave Analytics.<\/p>\n

Howard Nemiroff, professor of finance at Carleton University says the tendency to flock to gold in an unstable economy is referred to as a \u201cflight to safety\u201d by investors.<\/p>\n

\u201cAny scarce resource could effectively be deemed safe, but gold has been recognized as a store of value for centuries, thus the flight to it,\u201d he says.
\nMcTaggart says Orezone\u2019s share price tends to rise and fall with the stock market, not counter to the market.<\/p>\n

\u201cIt trades on average only about 86,000 shares per day, and the price swing on Monday [Nov. 21] alone was $0.25 on a $3.00 stock. That’s over an eight per cent move in a given day,\u201d Nemiroff says.<\/p>\n

LOOK TO MANAGEMENT<\/span><\/strong><\/p>\n

McTaggart says financial analysts are confident in Orezone\u2019s growth and some of them predict Orezone\u2019s stock price could rise to $7.50 within the next year.<\/p>\n

Its 52-week range has been from $2.40 to $5.26.<\/p>\n

\u201cIf we want you, your friends and families to invest, we somehow have to do a better job of standing out from the others.\u201d<\/p>\n

\u201cBeyond its core gold projects, what distinguishes Orezone from hundreds of other junior companies are its solid financials, dedicated investors, and strong leadership team that has a track record of success,\u201d says McTaggart.<\/p>\n

Gordon says management is the most important factor to consider when investing in junior gold companies.<\/p>\n

\u201cManagement can make or break these companies,\u201d he says.<\/p>\n

McTaggart says this has a great impact on the relationship Orezone has with other investors.<\/p>\n

\u201cIf we want you, your friends and families to invest, we somehow have to do a better job of standing out from the others,\u201d he says.<\/p>\n","protected":false},"excerpt":{"rendered":"

For Orezone Gold Corp., an Ottawa-based exploration company, 2012 is going to be all about the Bombor\u00e9 gold project. Located<\/p>\n","protected":false},"author":43,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,1],"tags":[248],"class_list":["post-2323","post","type-post","status-publish","format-standard","hentry","category-corporate-profiles-2011","category-news","tag-sara-douha"],"_links":{"self":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2323","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/users\/43"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2323"}],"version-history":[{"count":13,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2323\/revisions"}],"predecessor-version":[{"id":4441,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2323\/revisions\/4441"}],"wp:attachment":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2323"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2323"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2323"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}