Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orezone Gold Corp (ORZCF, Financial) achieved a record throughput of 1.5 million tons in Q3, running at a rate of 6 million tons per annum.
- The company reported zero lost time injuries (LTIs) with 1.31 million hours worked during the quarter, highlighting strong safety performance.
- Orezone Gold Corp (ORZCF) secured project financing for its hard rock expansion, with construction already commenced and first gold expected in late 2025.
- The company generated free cash flow of $14.1 million in Q3, ending the quarter with a healthy cash balance of $66.9 million.
- Orezone Gold Corp (ORZCF) is optimistic about its exploration potential, with initial drilling results showing robust findings, indicating a large orogenic system.
Negative Points
- All-in sustaining costs per ounce remained elevated at $1,655 in Q3, impacted by higher strip ratios and lower grade stockpile processing due to heavy rainfall.
- Government royalties increased due to higher gold prices, affecting overall costs.
- The mining contractor faced challenges in Q3 due to low equipment availability and wet ground conditions, resulting in lower mining volumes.
- The company's VAT receivable stood at $34 million, with uncertainty around the timing and size of refunds from the government.
- Orezone Gold Corp (ORZCF) experienced higher power costs in the first half of the year due to low grid availability, impacting operational costs.
Q & A Highlights
Q: Can you provide details on the grade profile for October and expectations for Q4 production?
A: The grade in October was higher at around 0.81, primarily due to mining in the south. We expect robust production in Q4, although not consistently at 0.81, as mining will continue in other areas. The strip ratio will be lower, and costs will be reduced due to less drill and blast activities.
Q: Can you quantify the savings from purchasing the previously owned mill for the expansion?
A: We are on budget, possibly below, for equipment costs. The structural mechanical piping contract will provide more clarity on overall costs. We plan to update the market on the project's financials in early 2025.
Q: What is the timeline for a decision on the stage two hard rock expansion?
A: We are considering advancing the timeline for stage two, potentially updating the market in 2025. Strong gold prices and ongoing drilling results may influence this decision.
Q: What is the status of the arbitration proceedings related to the power purchase agreement?
A: The arbitration is ongoing, with a conclusion expected in the first half of next year. We are pursuing significant damages for not receiving the fixed price tariff and additional costs incurred.
Q: When can we expect a resource update on the sulfide deposits?
A: We plan to add more rigs in 2025 and aim to update the resources and reserves by the end of next year. The current reserves and resources were calculated at lower gold prices, and we expect to outline a larger deposit.
Q: What is the status of the VAT receivable, and when do you expect it to peak?
A: We are in discussions with government officials and hope to see a reduction by the end of this year. However, VAT may increase due to expansion activities. The timing and size of refunds are uncertain, but we expect more clarity next quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
