Q4 2023 Orezone Gold Corp Earnings Call

Significant amount contributing to this working capital deficiency include $22 million in scheduled monthly repayments in 2024 on of course bank senior debt and.

An $8 million.

We will to Egencia LNG that is under dispute.

As a reminder, we have launched an arbitration claim for damages against cancer further failures under the previous power purchase agreement.

And $10 9 million in VAT receivable re class from current to non current due to the timing uncertainty of VAT refunds in Burkina Faso.

<unk> mentioned amounts totaled $39 1 million.

As noted in our Q4 disclosure documents and in our press release of March 26. The company continues to work collaboratively with Kors bag, our senior lenders to secure the additional requisite financing for our phase two hard rock expansion.

In the interim to strengthen the company's current cash position and to allow the company to continue with its 2024 business plans uninterrupted.

Are in advanced stages of securing a bridge loan from <unk> Bank and expect to announce a loan clothing. Our first dropdown later in April.

Next slide please.

Yeah.

Yeah.

Production and unit cost summary, operationally for Q4, firstly for mining $5 9 million tons were mined at a strip ratio of 119 times in Q4 were 21% higher than the previous quarter as Q4 mining rates benefited from the addition of a second mining contractor mobilized during Q3 and from the end.

The rainy season in October the higher mining rates resulted in greater or release and delivery of better ore grades to the mill for.

For 2023 25 million tonnes of ore mined in accordance with our mine plan.

For processing Q4 ore tonnes process was $145 million nearly identical to ore tonnes processed in Q3 average head grade in Q4 was eight two grams per tonne gold.

From 74 Gram per ton gold in Q3, while process recovery remained steady at 88, 9% for both quarters.

As mining deepens and certain pit the quantity of harder transition or is increasing which resulted in slightly lower metallurgical recoveries, along with greater consumption of power and steel balls for grinding a major reagents for gold extraction.

For cost Mindsight unit cash costs, covering mining processing and site G&A was $22 per ore tonne process in Q4, which was a 2% increase quarter over quarter from Q3 costs of $21 57 per ton.

Higher unit cash costs is attributable to a greater reagent consumption.

More transition or higher planned security spending and from the recognition of a year end inventory adjustment to parts and stock offset by the benefit of a lower strip and unit mining costs in Q4.

With that I'll hand, it back to you Patrick.

Patrick: Thanks Peter.

Patrick: So in terms of 2024 guidance, our gold production guidance range of between 110 to 125000 ounces at all in sustaining costs of between 13 $113 75.

Patrick: And trading sustaining capital of between $14 million to $15 million and growth capital, excluding the phase two expansion of $16 million to $17 million.

Patrick: For sustaining capital of major items are $5 million to $6 million for ongoing tailings lifts and $6 million for mine equipment and infrastructure, which includes two new grade control drill rigs are new explosives magazine and extension of the main haul road into the southern area for mining in 2024.

Patrick: Growth capital includes the continuation of Phase II Rapids will go into a little detail on the next slide and associated compensation livelihood restoration programs associated with that movement of villages.

Patrick: Our guidance for the P&C rock expansion would provide a once all the debt and binding commitments are received board approval has been received.

Patrick: At the board.

Patrick: And bulk earthworks have been completed and front end engineering and design is remains ongoing.

Patrick: So in terms of our 2020 for guidance in 2023, we mined exclusively in the northern portion of the.

Patrick: Of the property as shown by the large blue square.

Patrick: Mining in H two continues to be centered I'm, sorry hits, one continues to be centered in the northern portion in 2024.

Patrick: We were hoping to have full access to all of the southern portion of the deposit, but we will now have staged access due to the timing of the ramp really that's the only issue that we have and we will be mining in the Sega portion in the second half of 2024 following the relocation.

Patrick: Of the MB three community in that area.

Patrick: Overall, what happens is we push a lot of the higher grade that was planned to be mined in 2024 into 2025, particularly in the southern area of the deposit which means that we have to mind some more transitional wear in the north during 2024 with a slightly higher strip ratio and obviously slightly lower.

Speaker Change: <unk> as Peter said, which does.

Speaker Change: Affect the all in sustaining costs for 2020.

Speaker Change: So in terms of outlook.

Speaker Change: We obviously had an excellent first year at Bombardier and has really set the foundation for.

Speaker Change: The growth of the company, we achieved our guidance of 141000 ounces at all in sustaining cost at.

Speaker Change: At just over 1100 per ounce sold we have over 14 million hours worked without an LTI, including $4 4 million in 2023.

Speaker Change: We've now established a grid power and.

Speaker Change: And finish that can make thing during Q1.

Speaker Change: We've materially deleverage the company by reducing our senior debt by $33 8 million during that year.

Speaker Change: So during 2024.

We have $57 million remains debt.

Speaker Change: That remains by the end of Q1 2024.

Speaker Change: We will finance and start construction of phase two hard rock expansion will.

Speaker Change: We will be evaluating an exploration program we completed.

Speaker Change: A phase one structural geological structural review of the Bombora deposit I'd like to remind everybody. This is a 14 kilometers long system. The average depth of the reserves in the study released in 2023 was 38 meters still it's still wide open we have completed some early work.

Speaker Change: And we expect to release some of these results in the coming weeks in regards to that we're quite excited about what we see here and bumble remains open.

Speaker Change: Very much so and.

Speaker Change: We do continue to evaluate accretive M&A opportunities in the West African region. We do believe we will be part of that.

Speaker Change: M&A that continues.

Speaker Change: Recede in West Africa, and there are some very interesting opportunities as we look forward to 2024 and 2025.

Speaker Change: With that I'll hand, it back to the operator, thank you.

Speaker Change: Yes.

Speaker Change: At this time I would like to remind everyone in order to ask a question simply press Star then the number one to Andre telephone keypad.

Speaker Change: Again to ask a question. Please press star one on your telephone keypad.

Speaker Change: And your first question is from the line of <unk> Gill with TD Securities. Please go ahead.

Jaspreet Gill: Hey folks.

Jaspreet Gill: A quick question for me.

Just on the potential financing package that.

Gill: Our announced later this year is that still going to be.

Dilip Gill: 100% debt are you looking at maybe a mix of debt equity, maybe a stream or alternative financing any details you can provide on that would be appreciated.

Speaker Change: Yes, no absolutely it will be.

Speaker Change: Just in that with our current lender plus cash flow from the operations as we proceed through 2020 for 2025.

Speaker Change: Obviously, we're looking at that quite closely how we execute on that but we will not get ourselves and it'll be a very disciplined expansion.

Speaker Change: Prudent and disciplined so no equity no streaming.

Speaker Change: No royalties.

Speaker Change: Okay. Thank you alright, thanks for the color.

Speaker Change: Once again, if you would like to ask a question. Please press Star then the number one to Andre telephone keypad.

Speaker Change: Your next question is from the line of Sean the cellular with Equinox partners. Please go ahead.

Sean: Hi, Betty.

So your income tax that you have do.

Sean: Is that.

Sean: Canadian or is that.

Sean: In Burkina and when exactly does that do that $18 million Bucks. Its a current liability, but can you give us some sense in terms of what kind of cash obligation that is for you guys and I'll, let Peter answer that Peter Yes, Sean So that income tax liability you see at the end of 2023 that entirely relates to our Burkina operations in the income that we earned in the 2023 years.

Peter: And that payment is coming up due on the year end filing.

Peter: In the second quarter.

Peter: Okay.

Peter: Okay.

Peter: And how does it so how does the income tax filing work in Burkina is that you just show up with the check on the day or you file and pay later or how does that work from a cash flow perspective, yes. So in terms of that question. There Sean we are in discussions with the Ministry of finance that we right now have a substantial amount of our working capital tied.

And VAT receivable.

And so the plan now is to be able to use that and be able to offset that against the tax liability that is coming due in Q2 here so and that amount is due at the time of the filing of the 2023 return which must be done before the end of April of this year.

Thanks.

Your next question is from the line of Bryce Adams with CIBC. Please go ahead.

Yeah, Hi, there. Thanks, Patty just one question with.

With regards to the <unk> settlement and then the mining in the second half of this year, how much buffer room do you have in that timeline is there a fair bit of wiggle room or is it pretty tight.

So in terms of where we're at in 2024 mine plan, where we're pretty comfortable with that part <unk> is almost finished it really is the next day rates down.

And it really all gets down to just stare. These sacred ceremonies that they have to have in various chairman that come in and do various things we were delayed on that so we couldnt get into to get that and then get belt. So we really we were hoping to get <unk> III and MB four completed.

And before is a smaller village unfortunately it.

It would be quite simple to do <unk> is the main one.

We're pretty.

Pretty much done on all of the construction, we're going to start moving people at the end of Q1 into Q2, So we're fairly comfortable with everything in that regard, it's really the southern portion that we didn't have confidence in.

We've taken it out of the mine plan for 2024 and moved into 2025.

Okay. Thanks, so much.

Your next question comes from the line of Alex <unk> with Pi financial. Please go ahead.

Hey, guys. Thanks for taking my call.

Got a question for you as it relates to your mine plan thinking about cash flows and the cash flow that you expect to generate that help fund the phase II expansion. So you noted grades for this year, a little bit lower because of delayed access to the southern zone, a little bit higher strip.

The additional tons that you're mining this year were they to be mined in 2025 I'm just trying to think of 2025 I believe the mine plan had for a higher strip and slightly lower grade anyways. So would it be fair to to lower the anticipated strip for next year or these tons that are being mined this year, where do they fit in the mine plan.

Yes, yes were just working on that right now Alex Great question.

It will obviously will be a positive effect because as you move them into the higher grade with lesser strip in 2025. So we're really just pushing those into there.

Were finalizing that plan right now obviously, what we were hoping to get all that done. This year. So we've had to change our nine plus III planning.

On that regard we are doing ongoing grid control. The other thing you should know as we as I said to you. We are doing additional drilling based on some new thoughts around the deposit and we will release some of those results next week or the week after likely next week.

Which I think will show where we can.

Improved things quite a bit so just.

Just wait for that as well.

Okay, great. Thanks.

And once again, if you'd like to ask a question. Please press star one on your telephone keypad.

Okay.

Yes.

Yeah.

Your next question is from the line of Alan Shar trend. Please go ahead.

Alan Shar: Yes, good morning.

Alan Shar: Enquiring about whats the income tax rate is.

And if its changing every year.

Alan Shar: And also I wanted to know about the expansion when is it going to be completed.

Speaker Change: For the second phase.

And whether or not you.

Speaker Change: Thinking of delaying it more.

Speaker Change: Until the interest rates go down lower.

Speaker Change: Thank you.

Speaker Change: Okay.

So the tax effective tax rate in Burkina right now for us under the current mining code is 27, 5%.

Peter: The royalties at $2000 gold are.

Eight 7%, 7% plus a 1% development funds so.

Peter: Would we delay it no we will continue with the expansion, but I wanted to just as I said earlier on we will do it in a very prudent and disciplined manner.

Peter: The beauty of Bombora is that a hard rock and the oxides have got a very very similar metallurgy. So the leach time et cetera is all the same so we will look at that depending on what level of debt, we want to take on how we manage it et cetera is all part of the decision making in the <unk>.

Peter: Ming months so once.

Peter: To emphasize is that ore zone right throughout this process has got a very prudent.

Peter: Capital management structure.

Peter: Basically we look after the return on invested capital as we as we go forward.

Peter: But in terms of the expansion absolutely.

Peter: We will be looking at commencing in the second half of <unk>.

Peter: 2024, with the with the plant coming online late in 2025, that's what that's the plan and that remains the plan.

Speaker Change: Great. Thank you.

Peter: Okay.

Peter: Okay.

Peter: And at this time there appear to be no further questions I will now turn the call back to Mr. Daly for any closing remarks.

Mr. Daly: Thank you.

Mr. Daly: 2023 was a very successful year as it as a junior company, starting up and a remote region of West Africa, I think we achieved.

Mr. Daly: Excellent results obviously in 2022, we've built a mine on time under budget, we've operated at a 11% above nameplate, we met all of our guidance we've done a new store.

Mr. Daly: Study to show the expansion on the on the property, we continue to drill with results coming out in the near future.

Speaker Change: And we look forward to a very successful 2024 into 2025 for the company. Thank you very much.

Speaker Change: This concludes today's webcast and conference call. Thank you for joining you may now disconnect.

Speaker Change: Yes.

Speaker Change: Yes.

Mr. Daly: Okay.

Mr. Daly: Yes.