Orezone Gold: A Disappointing Capital Raise But Shares Look Cheap Here

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About: Orezone Gold Corporation (ORZCF)
by: FI Fighter
This article is exclusive for subscribers.
FI Fighter
Deep Value, gold, commodities
Summary

Orezone recently announced an equity financing to raise ~C$20 million, albeit at a disappointing share price of C$0.54/share, which is closer to 52-week lows than highs.

Further, the company had to issue out half warrants (good for 3 years), which, historically, is not something the company has had to do in previous financings.

Burkina Faso continues to make the news for all the wrong reasons, and the spike in conflict and violence in recent years certainly hasn't helped Orezone Gold.

The Phase II Sulphide Expansion Feasibility Study published in June 2019 for the Bomboré Gold Project shows compelling project economics, featuring an after-tax NPV (5% discount rate) of $520 million and an after-tax IRR of 61.4% when plugging in a gold price of $1,500/oz.

With a market cap of only ~C$107 million, shares of ORZCF look cheap down here, but mine financing could be difficult to obtain, which could keep the share price low and depressed.

These days, it isn't easy being a gold company with projects located in Burkina Faso. Particularly, if you're a gold developer looking to secure initial CAPEX funding so that you can attempt to put a