Mar 2 2021
EURO Ressources S.A. reports that it has recently signed a binding letter of intent with Orezone Gold Corporation to obtain 50% of the payable silver production on Orezone’s Bomboré Project, situated in Burkina Faso in West Africa for US$7,150,000.
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Bomboré is considered one of the biggest undeveloped gold deposits in Burkina Faso. A 2019 Feasibility study shows that Bomboré is an appealing shovel-ready gold project with predicted yearly gold production of 118,000 ounces spanning a mine life of 13+ years.
Metallurgical studies and assay data indicate that the Bomboré deposit includes a silver component, with EURO’s review of assay data signifying that the silver to gold ratio is around 1:1.
The Silver Stream entitles EURO to get 50% of payable silver production over the mine life. The agreement includes a minimum guaranteed delivery obligation of 37,500 ounces of silver annually in favor of EURO, until 375,000 ounces of payable silver is delivered.
Transaction Highlights
- Expanded Asset Base and with Near Term Cash Flow: Orezone is completely financed for Bomboré construction with the first gold-pour planned for the third quarter of 2022.
- Long-Life, Low-Cost Operation: The 2019 Feasibility Study delineated a 13.3-year operation at Bomboré generating about 1.6 Moz of gold in total at an AISC (All-In Sustaining Cost) of US$ 730/oz with AISC of US$ 672/oz in the first decade. Historic assay data suggested a silver to gold ratio of about 1:1. EURO will get 50% of the payable silver production at Bomboré over the mine life.
- Exploration and Expansion Potential: EURO will gain profit from the expansion of the Bomboré project in the future, which has been developed by Orezone to house throughput expansion in the future. Considerable exploration potential prevails near Bomboré, which includes various mining exploration permits summing around 14,934 hectares, which has the ability to extend mine life more than the 13.3 years delineated in the 2019 Feasibility Study.
Silver Stream Terms
The definitive silver purchase agreement will be signed with Orezone’s Burkina Faso subsidiary. It will be executed according to the terms of the Stream Agreement:
- EURO will make a payment of US$7,150,000 in cash to Orezone on the Stream Closing (explained below) as consideration for buying 50% of the payable silver produced at Bomboré for the mine life.
- Orezone has awarded a payment assurance in favor of EURO to safeguard its obligations under the Silver Steam, which will need Orezone to provide a minimum annual payment, starting from the date of declaration of commercial production by Orezone, corresponding to 37,500 ounces of silver. If there is a drop in the annual silver deliveries, to the extent that any catch-up payment is needed, Orezone will make a first catch up payment only on the later of: (a) the fifth anniversary from the date of the initial silver delivery under the Stream Agreement and (b) repayment of senior secured term loan for developing Bomboré to guarantee that the aggregate minimum yearly payment has been fulfilled for each of the previous years. Subsequently, Orezone will only be needed to make catch-up payments on a yearly basis until the delivery or payment of 375,000 ounces of silver, after which the minimum annual payment assurance will no longer apply.
- Within the first five years of the mine life, if Bomboré’s processing plant reaches an average production rate in relation to sulfide ore of 3,300,000 tpa, Orezone has the right to regain 50% of the Silver Stream from EURO for US$7,150,000.
- EURO owns the right of initial refusal, for the mine life, over any additional silver production from Bomboré that has not been bought by EURO according to the Silver Stream.
- Completion of the Silver Stream is contingent on standard previous conditions for a transaction of this form.
Expected Closing
Silver Stream’s acquisition is anticipated to end in the second quarter of 2021 ('Stream Closing'), and EURO plans to financially support the US$7,150,000 investment using cash on hand at present.
Source: https://www.goldroyalties.com/