OREZONE RESOURCES INC company history: the story so far

History

Orezone bought out Gold Fields' stake in Essakane with a US$200 million share raising in late 2007, leaving it sole owner of a permitted Burkina Faso gold project.

2007: Building up Sega and buying Essakane

Orezone, an Ottawa-based explorer working in Burkina Faso, began the period with news from its Sega project. In October 2007 it raised the indicated gold resource there by 44% to 446,000 ounces (7.2 million tonnes at 1.9 grams per tonne), plus 64,000 ounces of lower-confidence "inferred" resource. A 25,000 metre drill program was under way, and a scoping study on a small heap leach operation (gold dissolved out of piled ore) put its capital cost at US$12.7 million.

The bigger move was Essakane. On October 11 Orezone announced it would buy Gold Fields' 60% interest in the project, and on October 29 it filed a preliminary prospectus for a share offering expected to raise US$200 million.

2007-2008: Sole owner of Essakane

The deal closed on November 27, 2007. Orezone issued 166.7 million shares at US$1.20, raising US$200.04 million; 154.2 million went to the public and 12.5 million to Minquest Fund I in a private placement. It paid Gold Fields US$150 million in cash plus 41,666,667 shares, valued at US$50 million, for the 60% stake. The new shares diluted existing holders, and an over-allotment option allowed up to 23.13 million more shares within 30 days. The record does not say whether it was used.

On December 5 Burkina Faso's environment ministry issued a Notice of Compliance on the environmental assessment, which Orezone called one of the final principal permitting milestones. The feasibility study foresaw 5.4 million tonnes processed a year, 2.65 million ounces of reserves at a US$500 gold price, capital cost of US$346 million over 18 months, and average output of 292,000 ounces a year at a cash cost of US$356 an ounce.

On June 18, 2008, Orezone filed an updated feasibility study by G Mining Services. No new headline figures were visible. At that date Orezone wholly owned Essakane, with no debt seen, and no financing or construction decision for the US$346 million project had been recorded.

Written from the 5 story beats below (2007 to 18 June 2008), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

2008

18 June
Orezone filed an updated feasibility study on Essakane, dated June 2008 and prepared by G Mining Services, as a 43-101 technical report. The visible part is mostly a table of contents; it refers to May 2007 resource and reserve estimates and a financial analysis, but no new headline figures are visible in the text provided.
resource reserve update

2007

5 Dec
Orezone received a formal Notice of Compliance from Burkina Faso's environment ministry on the environmental assessment of Essakane, which it now describes as wholly owned. The release calls it one of the final and principal permitting milestones. It also restates the feasibility study: 5.4 Mt a year processed, 2.65 Moz of reserves at a US$500 gold price mine plan, US$346 million capital cost (±15%) over 18 months, and average output of 292,000 oz a year at a cash cost of US$356/oz assuming oil at US$80 a barrel.
regulatory community update
27 Nov
Orezone closed its share offering and the Essakane purchase announced on October 11, 2007. It issued 166,700,000 shares at US$1.20 for gross proceeds of US$200,040,000 (154.2M to the public, 12.5M to Minquest Fund I in a private placement). It paid Gold Fields US$150 million cash plus 41,666,667 shares (US$50 million at US$1.20) for its 60% interest in Essakane, and the rest of the proceeds go to developing Essakane and general corporate purposes. Existing shareholders are diluted by the new shares (inference from the share issuance); an over-allotment option of up to 23,130,000 more shares runs for 30 days.
business combination
29 Oct
Orezone filed a preliminary prospectus for a share offering expecting gross proceeds of US$200 million, led by BMO Capital Markets, CIBC World Markets and J.P. Morgan; size and price are not yet set. It is conditional on Orezone buying Gold Fields' 60% interest in the Essakane project (announced October 11, 2007), which would take Orezone's stake in the project Gold Fields had been earning into beyond its earlier operator role; most proceeds are to fund that purchase and development. Existing shareholders face dilution if it proceeds (inference).
capital raising announcement
18 Oct
Orezone raised the indicated gold resource at its Sega project in Burkina Faso by 44% to 446,000 oz (7.2 Mt at 1.9 g/t), plus 64,000 oz inferred, validated by Met-Chem and not including 2007 drilling. A 25,000 m drill program is under way, and a scoping study on a 3,000 tonne-per-day heap leach estimates capital cost of US$12.7 million.
resource reserve update