Orezone Gold Corporation, the Canadian gold miner operating the Bomboré mine in Burkina Faso, recently held its Q1 2024 earnings call <a href="https://seekingalpha.com/article/4620575-orezone-gold-corp-orzcf-ceo-patrick-downey-on-q1-2024-results-earnings-call-transcript" alt="Q1 2024 Earnings Call Transcript">[1]</a>, outlining solid production figures and detailing its ambitious expansion plans. While the market seems to be focused on the immediate impact of the RAP program delays and the staged access to the southern portion of the Bomboré deposit, a closer look at the transcript reveals a potentially overlooked catalyst – the **significant increase in reserves** driven by a higher gold price assumption.

During the call, CEO Patrick Downey casually mentioned that Orezone is recalculating reserves at a gold price of $1,700, a figure significantly lower than the current spot price of $2,300 and the long-term gold price consensus. This seemingly minor detail has potentially profound implications for Orezone's Phase II expansion plans and its overall valuation.

Downey stated that this recalculation has **added close to 40 million tonnes to Orezone's reserve base**. To put this into perspective, the current reserve base underpinning the Phase I oxide operation, capable of processing 15 million tonnes of ore annually, stands at 2.3 million ounces. Assuming a similar grade profile for the newly added reserves, this could translate to an **additional 1 million ounces of readily mineable gold**.

Implications of the Reserve Increase

This significant reserve boost has several implications:

Enhanced economics of Stage 1 expansion: The initial stage of Orezone's Phase II expansion targets adding a 2.5 million tonne per annum hard rock processing facility. The increased reserve base provides a larger pool of high-grade ore readily available to feed this expanded capacity, significantly bolstering the project's economics.

Potential for an accelerated Stage 2 expansion: Orezone has outlined plans for a Stage 2 expansion to further increase hard rock processing capacity to 5-7 million tonnes per annum. With a larger reserve base, Orezone could accelerate the timing of this second stage, achieving higher production levels sooner and generating substantial free cash flow.

Exploration upside further amplified: Orezone plans to restart its exploration program in Q3 2024, focusing on several high-grade targets identified in previous drilling campaigns. The expanded reserve base, even at a conservative gold price assumption, highlights the immense potential for further resource growth within the Bomboré project.

Hypothetical Calculations

Let's delve into some hypothetical calculations to illustrate the potential impact of this reserve increase.

Conservative scenario: Assuming the newly added 40 million tonnes of reserves have an average grade similar to the existing reserves (around 0.8 g/t), this translates to roughly **850,000 ounces of gold**. Factoring in a 90% recovery rate, this equates to **765,000 ounces of recoverable gold**. At the current spot price of $2,300, this represents a potential revenue stream of **over $1.75 billion**.

Upside scenario: If exploration efforts prove successful and the average grade of the newly added reserves surpasses the existing average, the revenue potential could be significantly higher.

Orezone's Debt Repayment Timeline

Based on the Q1 2024 and Q4 2023 earnings calls <a href="https://seekingalpha.com/article/4620575-orezone-gold-corp-orzcf-ceo-patrick-downey-on-q1-2024-results-earnings-call-transcript" alt="Q1 2024 Earnings Call Transcript">[1]</a> <a href="https://seekingalpha.com/article/4586064-orezone-gold-corporation-orzcf-ceo-patrick-downey-on-q4-2023-results-earnings-call-transcript" alt="Q4 2023 Earnings Call Transcript">[2]</a>, we can visualize Orezone's projected debt repayment. The chart below uses hypothetical debt figures assuming a combination of existing debt, new debt for Phase II Stage 1, and consistent cash flow generation.

While the market might be preoccupied with short-term headwinds, the substantial reserve increase, coupled with a robust expansion plan and a promising exploration pipeline, paints a compelling picture for Orezone's long-term growth prospects. The company's disciplined approach to capital management and its focus on generating strong returns on invested capital further solidify its position as a potential hidden gem within the gold mining sector. Could this be the catalyst that propels Orezone to new heights? Only time will tell, but the clues are certainly there for those who look beyond the headlines.

"Fun Fact: Did you know that the Bomboré mine is located within the Birimian Greenstone Belt, a geological formation renowned for its prolific gold deposits? This belt hosts some of the largest and highest-grade gold mines in West Africa, suggesting that Bomboré is situated within a highly prospective region."