Andrew Racz
Director of Research
300 East 54 Street, Suite 26C
New York, NY 10022
Phone: (212) 319-6949
Fax: (212) 753-1944


Orezone Resources, etc.

Listed:    AMEX (OZN)

                 TSX (OZN)

52-week range: $1.10-$1.70

Shares Outstanding:

123,000,000 fully diluted

Capital Position:

$11M cash
No debt

Corporate Concept:

Explore a diversity of gold mining prospect
Expand resources/prove reserves
Build “projected” cash flow
Discount values to present stock price
Use “revalued” stock for acquisitions and external financing

Basic Background

It is a Canadian gold mining company operating in West Africa. In many respects, it represents a firmly growing gold mining entity, which is converting from its current status to a big cash flow generator in the end of the decade.

At the same time, it represents a historical mining entity that is rapidly growing up in Africa and, because of the geopolitical opportunities, it is becoming a building block for corporate success and, at the same time, part of a political movement of building through mine development, what we call the new Africa.

Let us start with historical significance.


Orezone is operating in Burkina Faso, a West African country, which is neighboring to Ghana in the south and Mali and Niger in the north and northeast. Burkina has a population of thirteen million people. Over 90% speak tribal languages, which belong to the Sudanic family.

French is still the official language, which brings it closer to Canada. Burkina Faso is a landlocked West African country the size of Colorado. It was part of the former French West Africa and known as Upper Volta. The last French ruler who tried to keep the French-speaking Africa together was General DeGaulle.

While the country is relatively poor, it is also peaceful. The population survives on subsistence level and its hope is to convert its mineral resources into large cash flows, which would enable the administration to change the entire structure of the country. If our calculation is correct, by the year 2010, the gold mining industry alone would bring in maybe half a billion to a billion dollars in cash, which is more than enough to create a new trend in the country’s infrastructure.



The new Africa which is based on the various countries’ tremendous mineral resources and political, peaceful politics is now in its first phase of development.

If we look at Orezone from a corporate and political futuristic corporate perspective, the numbers are intriguing.

Orezone has 123 million shares fully diluted outstanding. At the price of $1.50, it represents a market cap of $200 million.

While the company only has $11 million cash and no debt, it has identified mineral resources that can be converted into cash in the next five to ten years.

In a 60/40 partnership with Gold Fields of South Africa that committed $16.7 million to explore the largest gold field called Essakane together with the $7.9 million by Orezone, the transformation would lead to the beginning of mining during 2008.

Obviously, the many other people Orezone currently employs, $200 million market cap and less than $20 million capital investments a year is only an investment in the future but it doesn’t represent a major source of governmental income.

Orezone is being recognized by the financial community. It is part of the American Stock Exchange Gold Mining Index. It is listed on the American Stock Exchange. And it has a prestigious partner in Gold Fields and three major gold deposits, the Essakane, the Sega Project and the Bondi structure.

Altogether, there are now an identifiable gold resources of 3.0 million ounces, which is significant as it is, but is minor compared to the future potential and the operating philosophy of Orezone.

The latest drilling results continue to confirm our belief that the Essakane Main Zone is significantly larger than the current indicated resource of 2.4 million ounces and inferred resource of 300,000 ounces (based on a 0.5 g/t cut off grade). These resources were calculated in August, 2004, and almost 66,000m of drilling has been completed since that time. Ongoing drilling continues to extend the limits of the mineralization in the lower zones, down dip, and along strike to both the north and south.

Summary of Recent Results from the EMZ
(see complete table of results at







ERC 1396






ERC 1205D






Years 1-2

Year 3

• Identify gold reserve

• 4 million ounces

• Complete feasibility

• Start producing
300,000-400,000/per annum

Year 3

10th Year

Cash flow:
Government revenue:

150,000 ounces/yr
$60 M
$20 M
$5 M

$600 M
$200 M

1.5X current market value


In addition to Essakane, Orezone’s strategy is to explore the flat territory of Burkina Faso and the neighboring countries of Niger and Mali, where it has a number of smaller gold fields which, in aggregate, create interesting prospects.

The numbers are as follows: Junior company can identify a million ounces of gold research, which translates into a realistic gold reserve of half a million to 700,000 ounces. This can generally be brought on stream at production of 100,000 ounces in 24 months with a capital cost of $50 to 60 million.

The picture of such development would create, in three years, a revenue base of at least $50 million per annum which, over ten years with the accumulated cash flow, would be about $300 million plus interest.

Orezone Resources Inc. (OZN: TSX, AMEX) is an emerging gold producer that owns Essakane, the largest gold deposit in Burkina Faso, as well as several advanced stage projects in West Africa. Burkina Faso is a politically stable country that is located in one of the world’s fastest growing gold producing regions. Orezone’s mission is to create wealth by discovering and developing the earth’s resources in an efficient and responsible manner. Orezone is based in Ottawa, Canada.

While it’s difficult to do in practice but easy to see in analysis, ten similar projects would lead to a revenue potential per annum of $500 million and, over ten years, a total of $5 billion.

Depending on the level of taxation, level of mining retention and the level of reinvestment in gold assets in Burkina Faso, the cash retention in the country in a single project is meaningful.

Politically, this is where the changes come into it. Gold is one of West Africa’s key mineral wealths. With modern technology and demand for commodities, demand for gold, this is, on a gigantic scale, going from project to project, a source of cash flow for Burkina Faso. In other words, a development of key commodities, mainly gold, converts itself to a much larger amount of money than what we consider foreign aid.

The basic structure of a mining company in Africa, in a new Africa is as follows: Public company in Canada, which conducts the operation and raises the money, gets the engineering and the direction going, is tied into a corporate structure inside the developing Africa. The cash flow enriches the stockholders and increases the price of the stock. This leads to the ability to raise more cash (in Orezone’s case, that’s $100 million) and create mines which, in turn, generate cash, a welcome change to foreign aid.

Taking into consideration that the largest project, the Essakane gold project is four, fivefold on the typical 1 million ounce project, our projection for the company through the decade is as follows:

Revenue: $200M
Net cash flow: $120M
40% to OZN: $48M
Per share: $0.35
Discounted to 5 years: $1.00 plus

If they simply then analyze the potential cash generation and the cash to be raised by its parent company and the gold projection beginning in 2007 and the following five years, it is obvious that a company is emerging that simply hasn’t succeeded to emerge in the last fifteen years.

Orezone, in fact, is the combination of three factors: One, the commodity decade which needs the products of Africa; two, modern management techniques, which can combine mining management and money raising in three continents; three, the defeat of the Cold War, which created conducive working conditions in the Third World, replacing internal frictions, internal political depression with the hope of capitalizing with Western methods and the emergence of the commodity-rich new Africa.

What I couldn’t specify, but it’s obvious, is that if the above development leads to a much higher price in Orezone, it cannot only raise cash, but it can acquire other companies of similar nature. We foresee a large-scale consolidation among the African-based but Western-managed and assisted companies in the next five years and some of them will emerge as billion-dollar enterprises representing the new world, beneficial both to Africa and, at the same time, satisfy the commodity needs of the old world.

Andrew Racz

Dated: September 14, 2005

Expenses of less than $10,000 were paid by ORKO


Information contained herein is based on data obtained from recognized statistical services, issuers reports or communications or other sources believed to be reliable. However, such information has not been verified by us and we do not make any representation to its accuracy or completeness. Any statement non-factual in nature constitutes only current opinions which are subject to change. BERAL INC. or their officers, directors, analysts or employees may have positions in the securities or commodities referred to herein, and may as principal or agent buy and sell such securities or commodities. An employee, analyst, officer or a director of BERAL INC. may serve as a director for companies mentioned in this report. Neither the information nor any comment expressed shall constitute an offer to sell or a solicitation of an offer to buy any securities or commodities mentioned herein. There may be instances when fundamental, technical and competitive opinions may not be in concert. This firm may from time to time perform investment banking or other services for or which investment banking or other businesses from any company mentioned in this report.



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Andrew Racz. 300 East 54 Street, Suite 26C, New York, NY 10022
Phone: (212) 319-6949 Fax: (212) 753-1944. E-mail:

Copyright © 2011 Andrew Racz. All Rights Reserved.