Earnings call transcript: Orezone Gold Q2 2025 reports strong revenue growth

Orezone Gold Corp (ORE) announced its Q2 2025 earnings, revealing a robust performance with revenue surpassing forecasts. The company’s revenue reached $94.5 million, exceeding the expected $92.2 million. Despite this positive outcome, Orezone’s stock price saw a slight decline of 0.87% in after-hours trading, closing at $1.14. According to InvestingPro analysis, the company maintains a GREAT financial health score and currently appears undervalued relative to its Fair Value. The market reaction reflects a mix of positive financial performance and cautious investor sentiment.

Want deeper insights? InvestingPro subscribers have access to 8 additional key tips about Orezone, including crucial valuation metrics and growth indicators.

Key Takeaways

• Orezone Gold’s Q2 revenue of $94.5 million exceeded expectations.
• Gold sales totaled 28,265 ounces, with an average price of $3,338 per ounce.
• The company’s stock fell by 0.87% in after-hours trading.
• Stage One Hard Rock expansion remains on schedule for Q4 2025.
• Future production targets aim for up to 250,000 ounces annually.

Company Performance

Orezone Gold reported significant revenue growth in Q2 2025, driven by strong gold sales and efficient cost management. The company mined 6 million tons and processed 0.56 million tonnes, maintaining a competitive position in the West African mining sector. With a focus on expansion and innovation, Orezone is poised to increase its production capacity significantly in the coming years.

Financial Highlights

• Revenue: $94.5 million, surpassing the forecast of $92.2 million.
• Gold sales: 28,265 ounces at $3,338 per ounce.
• Earnings from mine operations: $40 million.
• Adjusted EBITDA: $45.5 million.
• Adjusted earnings: $20.6 million.
• Cash position: $72.6 million.

Earnings vs. Forecast

Orezone Gold’s actual revenue of $94.5 million exceeded the forecasted $92.2 million by approximately 2.5%. This positive surprise highlights the company’s effective operational management and strong market demand for its gold products. The earnings per share (EPS) was not directly disclosed, but adjusted earnings stood at $20.6 million.

Market Reaction

Despite the positive earnings report, Orezone’s stock price declined by 0.87% in after-hours trading, closing at $1.14. This movement suggests cautious investor sentiment, possibly influenced by broader market trends or sector-specific factors. The stock has shown remarkable strength with a 78.12% year-to-date return, significantly outperforming many peers. The stock trades between its 52-week range of $0.42 to $1.09, with current market prices suggesting potential upside according to InvestingPro’s Fair Value analysis.

Outlook & Guidance

Orezone Gold remains optimistic about its future prospects, with the Stage One Hard Rock expansion on track for completion by Q4 2025. This expansion aims to boost production to 170,000-180,000 ounces. The company has also approved a Stage Two expansion, targeting an annual production of 220,000-250,000 ounces by 2026. With a moderate debt-to-equity ratio of 0.32 and strong return on equity of 26%, the company appears well-positioned to fund its growth initiatives.

For detailed analysis of Orezone’s expansion plans and financial outlook, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. The ongoing exploration and drilling activities are expected to further enhance Orezone’s resource base.

Executive Commentary

CEO Patrick Downey expressed confidence in Orezone’s growth trajectory, stating, "In the next sixteen months, Bambore will become one of the larger mines in West Africa." Downey also highlighted the company’s strong community and government support, which is crucial for the successful expansion of operations.

Risks and Challenges

• Potential fluctuations in gold prices could impact revenue.
• Operational risks associated with expansion projects.
• Regulatory changes in West Africa may affect operations.
• Market volatility could influence stock performance.

Q&A

During the earnings call, analysts inquired about potential cost variations and government relations. The company confirmed its strong government ties and mentioned ongoing negotiations regarding a government free carry interest of 10-15%. Additionally, Orezone anticipates releasing exploration results in Q1 2026, which could provide further insights into its growth potential.

Full transcript - Orezone Gold Corp (ORE) Q2 2025:

Franz, Conference Call Operator: Good afternoon, and welcome to the Aurizon Quarter two twenty twenty five Results Webcast and Conference Call. I am Franz, and I’ll be the operator assisting you today. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. Thank you.

I would now like to turn the call over to Patrick Downey, President and CEO. Please go ahead.

Patrick Downey, President and CEO, Aurizon: Thank you. And as the operator said, welcome to Aurizon’s Q2 twenty twenty five financial operations webcast presentation and conference call. With me today will be Peter Tam, Executive Vice President and CFO, who will go through the financial operational highlights for the quarter later on in the presentation. As you see this is an important notice including forward looking statements, please take time to read these at your leisure. So straight into the Q2 twenty twenty five highlights, which was another solid quarter for Bombay.

Gold production was 27,548 ounces and on track to achieve our 2025 guidance of 115,000 to 130,000 ounces for the year. Gold sales were 28,265 ounces for the quarter at an average realized price of $3,338 an ounce resulting in $94,500,000 in revenue. All in sustaining costs of $830 per ounce sold. Costs were somewhat impacted by external factors, including royalties, grid power and foreign exchange, which added $236 per ounce to the budget. Royalties added $92 the grid power interruptions added approximately $99 with FX contributing $45 of that $236 However, I’m happy to state that operations were very solid and all costs were generally within budget for the quarter.

Strong financial position for the quarter. We ended the quarter with $72,600,000 in cash. We obviously added with the Australian listing, we’ll talk about that later. Undrawn senior debt of $31,300,000 So available liquidity of $103,900,000 at the end of the quarter. And excitingly, Hard Rock expansion remains on schedule and on budget.

Stage one commissioning is scheduled for Q4 twenty twenty five and I’ll go through that a little later in the presentation. And importantly, subsequent to the quarter, we commenced trading on the ASX under the ticker ORE and we closed Australian $75,000,000 IPO to accelerate Stage two to bring us to 2 and 20,000 to 250,000 ounces a year. And that Stage two Hard Rock received Board approval and final investment decision to proceed, which we’ll talk about again later in the conference call. I’ll now hand over to Peter Tam to take you through the production and financial operational highlights.

Peter Tam, Executive Vice President and CFO, Aurizon: Thanks, Patrick. So for production unit cost, for mining, we mined 6,000,000 tons in Q2, which is comparable to the 6,100,000 tons mined in Q1 as mining volumes year to date are slightly ahead of plan. Early preparation of hard rock mining is taking shape as the main mining contractor is in the process of mining mobilizing additional equipment to site in the third quarter to handle the added material movement upon the hard rock startup. For processing, point five six million tonnes were treated in the quarter, an improvement of 3% over the previous quarter and 20% above nameplate, while head grades declined to 0.62 grams per tonne consistent with the mine plan. Grades are anticipated to improve starting in Q4 once hot commissioning of the Hard Rock plant commences.

Unit cash costs were negatively impacted in Q2 from a stronger average by 7% against the U. S. Dollar when compared to Q1 averages. In addition, the seasonal impact of lower grid availability was experienced again this year with grid utilization at 50% in Q2 when compared to 90% in the 2024 and ’70 5% in Q1 of this year. Importantly, utilization has seen a steady improvement starting in July with utilization at 76% for July and over 90% for August to date.

Patrick Downey, President and CEO, Aurizon: Next slide.

Peter Tam, Executive Vice President and CFO, Aurizon: Financial and operating highlights. Record gold prices realized in Q2 drove Orezone’s quarterly financial performance with earnings from mine operations of $40,000,000 adjusted EBITDA of $45,500,000 adjusted earnings attributable to shareholders of Aurizon of $20,600,000 and adjusted earnings per share attributable to Aurizon shareholders of $04 Gold sales remain unhedged. From a cash flow standpoint, the company continued with its reinvestment and expansion of the Bonebury Gold Mine with $43,500,000 spent on investing cash flow as the company advances towards First Gold on its Hard Rock expansion later this year. The heavy investment in this quarter led to free cash flow being a negative CAD27.2 million. However, available liquidity remains strong at CAD103.9 million as stated earlier at quarter end, which was further bolstered by the successful closing of a CAD75 million equity offering in early August.

The company is well funded to execute on its growth initiatives for the remainder of this year, including the recent board sanctioned Stage two Hard Rock expansion. With that, I’ll hand it back to

Patrick Downey, President and CEO, Aurizon: you Patrick. Thanks Peter. As noted 2025 is really a significant transition year for us. We’re in the middle of the Stage one Hard Rock expansion, which will add 2,500,000 tons of Hard Rock to the existing 6.2 of oxide. Construction as well advanced commissioning plan for 2025, which will drive us into 170,000 to 180,000 ounces as we exit 2025 into 2026.

Obviously, would at current gold prices that would drive significant additional cash flow. We’re accelerating the Stage two Hard Rock. We were originally planning to do that in 2020 going into 2020 sorry, 2028 going into 2029. We’re now going to commence construction in 2026. The board has approved the final investment decision.

So, we’ll pull forward that expansion by two years with a construction in Q4 twenty twenty five into 2026 with commissioning in 2026, which would bring us into a production level of two and twenty thousand to 250,000 ounces a year starting in 2027. With very little debt. Current debt on balance sheet is around $68,000,000 So, again, extremely low debt on the balance sheet with 100 and after the financing, $150,000,000 of available liquidity. In the next sixteen months, Bambore will become one of the larger mines in West Africa. So, quickly on where we’re at with the Stage one expansion.

Currently, we’re on schedule and budget for the CapEx and startup in Q4. Project completion reached 63% by the end of Q2, obviously, we continue to advance that. Engineering and procurement is now fully complete. Jaw crusher installation is underway and I will show you some photographs here as we go through the presentation. Ore bin and structural steel commenced.

SAG mill installation is now well advanced. CIL tank installation complete and tested and structural steel installation on top of the tanks is commenced and the TSF expansion is well in hand. As I said, commissioning in 2025. I just want to alert you, there is an updated video on the website, so you can get on the website and look at that. It’s a very, very good video of where we’re at with the construction and what’s been happening over the past few months and weeks.

So the jaw crusher and dump pocket, which is the last major concrete pour is in its final stages. We’re starting to install steel work and equipment there now. The ore bin lime silo etcetera is well in hand in terms of erection. We start putting in the connection conveyor, feed conveyor to the SAG mill next. SAG mill is well in hand, concrete is complete, installation is well advanced as you can see from this photograph.

Tri screen leading into the CIL circuit is up and installed. We start installing pipework, etcetera, into those various distribution tanks for the CIL. Next, photographs of the CIL tanks, which have all been water tested, all the inter tank launders in place. You can see the top of tank steel work on the ground and we’ll start lifting that and erecting it on top of the tanks in the coming days. And the TSF expansion well in hand.

And again, the video really shows that how much work’s been done on that and that’ll be finalized in essentially Q4 of this year. So, the next stage, it’s a very simple expansion. We’re going from 2,500,000 tons to 5,500,000 tons per annum. It’ll drive the overall production to two and twenty thousand to 250,000 ounces a year. So, essentially in the next sixteen months, we will double our production.

We’ll add four additional CIL tanks, which are identical to what we have, a ball mill, which we’ve ordered, a pebble crusher, which we’ve ordered, an oxygen plant, which we’ve ordered, a thickener and water tank, a gold room expansion. The elution system is exactly a replica of the existing oxide circuit elution system, so no changes there. Engineering is well advanced. And as I stated, procurement is underway and we’re in the final negotiation with the existing contractors. So, those contractors will stay on-site and ramp straight into the construction of Phase two, which gives us great economics in terms of Mobi, Mobi and utilization of those contractors going forward.

So finally, to close out, strong quarter again, costs essentially affected by outside factors. Completion of Stage one is well in hand. That will bring our production to 170 to 185. They will also give us operational flexibility as we have a current standalone oxide and standalone hard rock. We’ve completed our Australian listing began trading on August 8.

We’ll increase the trading liquidity, new investors, access to mining focused funds and that recent financing allows us to really ramp into stage two expansion right away. We will have drilling results next week. Very excited. We continue to add to the current resource base and drill outside of that resource base. We’re getting a significant understanding now of the structural controls.

I think you will see that in this release coming out in the coming week. We’ve drilled approximately 30,000 meters in the first half of this year, successful on many fronts, including the Northstone footwall extended by 200 meters beyond the reserve pits, 800 meters along strike, P17 300 meters down plunge. These are all been big step outs. We’re not taking small step outs. We believe this is a big system and that’s been proven out to date.

And finally, we continue to have strong community and government support with the expansion, more jobs, more investment, more growth and it’s been a very strong relationship with both our local communities and with the existing government. And we continue to look forward to doing that in the coming months and years. Okay. Thank you very much for that. And I’ll hand you back to the operator.

Franz, Conference Call Operator: Thank you. And we will now begin the question and answer session. To join the queue. If you would like to withdraw your question, simply press star one again. If you called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your handset and phone is not on mute when asking the question.

And your first question comes from the line of Jeremy Hoy from Canaccord Genuity. Please go ahead.

Jeremy Hoy, Analyst, Canaccord Genuity: Thanks, operator. Hi, Patty and team. Appreciate you taking my question. First one for me is on costs, obviously impacted by some external factors this quarter. But otherwise, as per plan, you said, Do you see any risk to achieving the ASIC guidance for the year?

Patrick Downey, President and CEO, Aurizon: Yes, good question, Jeremy. Rightly relook at that in Q3. Obviously, we’re really at 90% power now. The royalties and the Forex, we really can’t do anything about at this point. Obviously, the power interruption, as Peter said, was seasonal, but really also affected by a fire in the substation, which was nothing to do with us.

It was on the Sonneville Substation. But we really want to look at it when we get into end by the end of Q3 because we’ll be ramping into the Hard Rock expansion and that will really tell us when we’re by that point, how well that will be and how much that will add. And so we’ll have a better understanding at that point where that would be driving cost towards the all in sustaining. As you know, in 2023 and 2024 with the Q4s and whatever that we had, we were well on track at the end. Q2 didn’t look great in either quarter and Q3 and Q4, we drove it all back again.

And that tends to happen on this project because of the seasonality of the operation.

Jeremy Hoy, Analyst, Canaccord Genuity: Yes. You’ve been consistent about expecting those grades to go up and a bigger Q4. On that note, how is sequencing progressing towards the hard rock?

Patrick Downey, President and CEO, Aurizon: Very well. Actually, I’m heading down there next week, but very well. Contracts are performing extremely well. As you know, we do all of our own construction management. That’s our job, our team.

And they’ve been driving it. We got a lot of equipment, steel work, whatever deliveries. Sometimes we even look, do we need to air freight stuff in this construction point? No, it’s all going very well. So, all the mechanical pieces, which is really happens quite quickly on these type of projects, will really start occurring in August and September of this year.

We’re already mined out at Hard Rock and various areas, including P17 South, which is our high grade zone. So, we’ll expect to start commissioning that jaw crusher sometime early Q4.

Jeremy Hoy, Analyst, Canaccord Genuity: That’s great to know. Thank you. Next one for me is on the you had a note on the government free carry interest. Currently in negotiations and looking at moving the government interest to 10% to 15%. Just wondering, are there any other points up for discussion during these talks or is it just that increased free carry interest?

Patrick Downey, President and CEO, Aurizon: No, it’s just that it’s the free carried interest, I mean, when we I think everybody else is pretty much on it. We have our meetings in the coming weeks. So we expect to be on it, but there’s no reason why we wouldn’t be on it. So we expect that to happen in the coming weeks. So, we will be at that 85% like IAMGOLD and Endeavor and WAF and everybody else.

Jeremy Hoy, Analyst, Canaccord Genuity: Yes, understood. And do you see this as being a good stable place to be in terms of where the mining industry and country sits with relation to the government?

Patrick Downey, President and CEO, Aurizon: We’ve always had very strong relationship with the government. I think everybody else would say the same. The minister of mines, minister of finance, minister of environment, etcetera, are all very well run ministries. Even now we’re starting to see, I know that various companies are getting their bat back, which is quite unique in some parts of West Africa. You hear about it, but we’re actually in Burkinah.

This clearly it’s reasonably well run. So we’re seeing that happening right now. As you saw, people are dividending out of the country. I think IAMGOL declared a large dividend recently. So overall, the government in terms of running the operations have been very helpful, even when we’re doing our hard rock expansion and getting our permits updated.

It did not take a heck of a long time to get that done. So they generally work reasonably well with you in that regard. Big thing for them is also good relationships with your communities, which we obviously have.

Jeremy Hoy, Analyst, Canaccord Genuity: Yeah, that’s clear. Thanks, Patty. On the exploration results, you guys have been stepping out and even hitting and proving out this theory of deeper mineralization. Can we expect to see progressive mineral resource updates? Or what might the timing be to see an update resulting from this exploration program?

Patrick Downey, President and CEO, Aurizon: Well, I don’t know how much of this drilling will get into that, but we will do an update and likely be ready Q1 of next year. So that’s what we’re doing. Just started that right now. And so we expect to have that out and ready by that time. A lot of work on that, obviously new gold price, etcetera, etcetera.

So we do expect to considerably expand our reserves, but we’ll see where it all lands late this year, early next year.

Jeremy Hoy, Analyst, Canaccord Genuity: Thanks, I appreciate you taking all my questions. I’ll step back in the queue.

Patrick Downey, President and CEO, Aurizon: Thank you.

Franz, Conference Call Operator: There are no further questions at this time.

Patrick Downey, President and CEO, Aurizon: Thank you.

Franz, Conference Call Operator: And I would now like to turn the call back over to Patrick Downey for the closing remarks. Please go ahead.

Patrick Downey, President and CEO, Aurizon: Thank you very much. Okay. As I said, another solid operating quarter very much in terms of plan, advancing our stage one, extremely excited that we’re now in the Australian Stock Exchange and also got approval to ramp up to stage two. As I said, look forward to some further exploration results in the coming days, and, it should be another solid year for Aurizon going forward. Thank you very much.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.