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Orezone Gold releases PEA report for Bombore project

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Orezone Gold Corp (TSE:ORE) announced Monday the results of a preliminary economic study on its Bombore gold project in Burkina Faso, West Africa, assessing two different scenarios, both of which returned positive results, said the company.

The report, which looked at the potential of both an open pit heap leach, and carbon-in-leach (CIL) mining scenario, showed that both options are economically feasible if inferred resources can be upgraded to the indicated category, Orezone said.

According to the base case model, which was based on an $1,100 per ounce gold price, the after tax internal rate of return (IRR) was 9.9% and 6.9% for the heap leach and CIL option, respectively, with an after-tax net present value of between $42 and $43.7 million, at a 5% discount rate.

At a mine life of either 8 or 9.1 years, the study estimated average annual production of 118,000 and 240,000 gold ounces at a direct cash cost of $669 and $694 per ounce, for the heap leach and CIL option, respectively.
Initial capital costs ranged from over to $200 million to just under $500 million.

"We're very pleased with the results of this study given the use of a conservative $1000 pit shell," said president and CEO Ron Little.

"We could expect approximately a 20% increase in resources and a 15% decrease in the strip ratio just by using a $1,200 pit shell.

"The study is in line with expectations and we are confident we can improve the overall economics with further drilling and engineering studies."

Using a higer base gold price of $1,500 per ounce, the after tax IRR improves to 27.8% for the heap leach scenario, and to 19.7% for the CIL option.

The company said the results provide confidence for targeted production in  2015. Currently, Orezone is completing a major 170,000 metre infill and expansion drill program to increase and upgrade the Bomboré resources, which is now approximately 33% complete, scheduled for full completion by early next year. 

Although the plan is to complete a full feasibility study in 2012, drilling will continue as long as resources continue to expand, the company said.

The preliminary report was based on the last resource estimate in October 2010, which delineated 1.6 million ounces of indicated mineral resources and 1.9 million ounces of inferred resources.

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