Orezone Gold Corporation

Hello, my name is Chris and I'll be your conference operator today. At this time, I'd like to welcome everyone to the ORA Zone Q1 2023 conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. Thank you. Patrick Downey, Chief Executive Officer. You may begin.

Thank you and good morning. Welcome everyone to Orzone's first full quarter of reporting of operations and financial performance. As stated, all figures are in US dollars and less stated. Today I have with me Peter Tan, Chief Financial Officer, who will be walking through the financial data and performance for Q1. I also have Ryan Goodman, VP Legal Administration, and Kevin McKenzie, VP Corporate Development and IR. I will be making forward-looking statements, so please have a read of this disclaimer in your own time. So firstly, just a quick walk through the summary of the Q1 highlights. Gold production for the quarter was 41,301 ounces. Gold sales were 43,139 ounces at an all-in sustaining cost of $926 per ounce. Our plant operated at approximately 13% above nameplate which is an exceptional performance and really a testament to the team down on site. Zero lost time injuries, and I'll walk through that later on and what it means. Our cash at the end of the quarter was $45.2 million, and we also repaid $9.8 million of principal senior loans. Also importantly during the quarter, we're advancing on all growth initiatives, the phase two expansion study, the grid power, and our phase two and three wrap. I plan to go through these, the above, in a little more detail later on in the presentation. So health and safety, we've had a solid safety record. I think, in fact, we're right up there with the best in the industry. In Q1, we had zero LTIs with 928,000 hours worked. Since taking records of work on the project, we have over 10 million hours now and over 1,600 days without an LTI. We are extremely proud of this achievement, and again, it is testament to the quality of our on-site leadership. We have ongoing safety initiatives, which we started right off the get-go from production, including emergency response training and mine rescue training. We brought in an international team who are experts in these areas to train, manage, and oversee these programs. And also, very importantly, we have a lot of ongoing local community training and awareness. We're building up our local community capability for small contracts and community work projects. And pre-qualification to tender includes safety training and an understanding of all our safety protocols and procedures. And with our RAP Phases 2 and 3, all of these contractors are local, which puts all of the money back into the communities. On this, I'll now hand over to Peter Tam. Peter.

Thanks, Patrick. On financial and operating highlights, the first quarter of 2023 was our first full quarter of commercial production, and it's reflected in our higher gold sales, production, and income figures as compared to the fourth quarter of 2022, where we only had two months of running operations. Our first quarter was strong financially, led by the sale of 43,139 gold ounces, at a realized gold price of $1,892 an ounce. Cash cost was $799 an ounce, and all-in sustaining cost was $926 an ounce, which resulted in a cash margin of $966 an ounce sold, or 51%. Revenue was $81.7 million, with earnings from mine operations of $39.7 million, after deducting costs of sale of $42 million. Pre-tax income was $28.5 million, which attracted an income tax expense of $2.9 million for the quarter. Tax loss carry-forwards available for immediate deduction have now been fully applied against income earned by our BOMBA rate operations over these past two quarters. Tax attributes from historical exploration and evaluation costs remain, but they are only allowed to be deducted over the life of mine for Burkina Faso tax purposes. As a result, we expect our effective tax rate and tax expense to increase in future quarters going forward. After income taxes, net income was $25.6 million and net income attributable to ORAZONE shareholders after deduction for non-controlling interest was $22.6 million. Basic earnings per share attributable to ORAZONE shareholders was $0.07 per share. Switching from earnings to cash flows, operating cash flow before working capital was $41.1 million and after working capital was $38.9 million. All this led to a healthy cash balance of $45.2 million at March 31st, 2023, meaning that we are well-positioned to fully repay our short-term senior loan as it comes due with Coors Bank in Q2, while continuing to fund our growth initiative. Moving on to slide six. Production and unit cost summary. On the mining front, 4.6 million tons were mined in a quarter at a waste-to-ore ratio of 1.1. Ore tons processed was an impressive 1.44 million tons, which exceeded nameplate by 13%. Average head grade was 0.96 gram per ton, and process recovery was a steady 92.2%, resulting in 41,301 ounces of gold production. Mine site unit cash costs declined 21% quarter over quarter from $23.93 per ore ton process to $18.92 per ore ton process, driven by greater mill throughput and lowering of fixed unit costs. Q4 2022 unit costs were higher as the process plan was still under commissioning for part of the quarter. We continue to control costs closely wherever possible, driven by improved operating practices for reagent dosage and consumption. Our unit consumption is below budget for all major reagents, including lime and cyanide, and this has had a positive impact on processing costs. However, we continue to see cost pressures from a strengthening local currency and from persistently high diesel prices in-country, which we had budgeted to fall in reaction to falling global oil prices in the second half of 2022. We have not yet seen falling diesel prices materialize. However, we will continue with our cost control efforts and we'll look for other controllable ways to manage costs. With that, I'll hand it back to you, Patrick.