Orezone to Acquire 100% Interest in the Essakane Project
Orezone Resources Inc. (OZN:TSX,
AMEX)
is pleased to announce that it has entered into an agreement with its partner Gold Fields Limited (“Gold Fields”, JSE, NYSE, DFIX: GFI) to acquire their 60% interest in the Essakane Project (“Essakane”) in Burkina Faso, West Africa in consideration for US$200 million in cash and shares. As a result, Orezone will become the operator with a 100% interest in the project.
Based on a recently completed Definitive Feasibility Study and subsequent resource update (September 2007) the 60% interest in the Essakane Project represents an addition to Orezone of 1.6 million ozs of gold in reserves, 2.4 million ozs in measured and indicated resources and 761,000 ozs
in Inferred Resources. As part of the terms of the
agreement, Gold Fields will receive US$150 million in cash
and US$50 million in common shares of Orezone that are
subject to a six month Lock-Up agreement.
Highlights of this
transaction for Orezone include:
- Increased profile in the sector – An immediate transformation from explorer to intermediate producer with expected production of 292,000 ozs of gold annually by 2010 at cash operating costs below US$360 per ounce.
- A 150% increase in gold reserves and resources including 2.65 million ozs of contained reserves, 4.4 million ozs measured and indicated resources and in excess of 2.4 million ozs of inferred resources.
- The transaction is accretive with respect to both reserves and resources per share, expected production per share, and net asset value per share.
- Increased liquidity and exposure to movements in the gold price.
- Consolidation of the project under one owner improves efficiencies, news flow and awareness that this is one of West Africa’s largest and most-advanced gold projects.
- A larger and stronger asset base from which Orezone will be better positioned for long-term internal growth and regional consolidation opportunities.
The Essakane Project is the largest gold deposit in Burkina Faso, West Africa. The Definitive Feasibility study envisions a surface mine and CIL facility processing an average of 5,400,000 tonnes per annum. The project has 4.0 million ozs measured and indicated resources and 1.3 million ozs of inferred resources at a 0.5 g/t cutoff. Reserves contained within a US$500 gold price mine plan are 2.65 million ozs. The project will take 18 months to construct at a total capital cost of US$346 million. Once operational, the mine is expected to produce an average of 292,000 ounces of gold per annum at a cash cost of US$356 per oz. The government of Burkina Faso retains up to a 3% net smelter royalty and a 10% carried interest in the project.
“This transaction is very accretive, simplifies our structure, sharpens our focus on the region and enhances our production and growth plans,” said Ron Little, CEO for Orezone. “It transforms Orezone from an entrepreneurial exploration company into an emerging intermediate producer with one of the most significant resource portfolios in the region.”
Ian Cockerill, CEO for Gold Fields said, “While the Essakane project is expected to make a good return and deserves to be built, Gold Fields’ relatively small stake in the project, mitigates against it becoming a Gold Fields franchise asset. We believe that Orezone is well positioned to turn this asset to account.”
Orezone is an explorer and emerging gold producer. The company has a pipeline of advanced and grassroots projects, all located in politically stable areas of West Africa which is one of the world’s fastest growing gold producing regions. Orezone’s mission is to create wealth by discovering and developing the earth’s resources in an efficient and responsible manner.
Gold Fields Limited is one of the world’s largest unhedged producers of gold, providing investors with maximum leverage to the gold price. Gold Fields has attributable production of 4.0 million ounces per annum, mineral reserves of 94 million ounces and mineral resources of 252 million ounces. The Group employs some 47,000 permanent employees across its operations and is listed on the JSE Limited South Africa (primary listing), the New York Stock Exchange (NYSE) as well as the Dubai International Financial Exchange (DIFX).
Conference Call & Webcast Details
A conference call will be held, Thursday, October 11th, at 11a.m. (ET) to discuss this transaction. You may join the call by dialing toll free 866-898-9626 in Canada and the United States, Internationally 800-8989-6323, or in the Toronto area at 416-340-2216. No access code is required.
Presentation slides will also be available at Orezone’s website www.orezone.com under Investor Relations.
The conference call will be recorded and you can listen to a playback of the call after the event by dialing toll free 1-800-408-3053 in Canada and the United States, or 416-695-5800. The pass code is 3239092#
For further information please contact:
Phone (613) 241-3699
Toll Free (888) 673-0663
Conference Call & Webcast Details
Orezone is being advised by CIBC World Markets Inc. and BMO Capital Markets. Orezone’s counsel is Stikeman Elliott LLP.
FORWARD-LOOKING STATEMENTS:
This news release contains certain "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors. The Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.
Readers are advised that National Instrument 43-101 of the Canadian Securities Administrators requires that each category of mineral reserves and mineral resources be reported separately. Readers should refer to the annual information form of Orezone for the year ended December 31, 2006, and other continuous disclosure documents filed by Orezone since January 1, 2007 available at
www.sedar.com,for this detailed information, which is subject to the qualifications and notes set forth therein.
Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources: This press release uses the terms “Measured”, “Indicated” and “Inferred” Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all
or any part of Measured or Indicated Mineral Resources will
ever be converted into Mineral Reserves. United States
investors are also cautioned not to assume that all or any
part of an Inferred Mineral Resource exists, or is
economically or legally mineable.
