Orezone Gold (ORE) Q2 2024 earnings summary

Executive summary

• Q2-2024 gold production was 25,524 ounces, slightly ahead of budget but down 28% year-over-year, with gold sales of 24,937 ounces at an AISC of $1,613/oz.

• Zero lost time injuries over 1.3 million hours worked; MV3 resettlement completed, enabling access to southern mining areas.

• Power supply disruptions led to increased costs and reduced throughput, but grid availability improved to over 95% in July and August, supporting higher production and lower costs for H2 2024.

• A $105M financing package and positive construction decision for the Phase II hard rock expansion were announced after quarter-end.

Financial highlights

• Q2-2024 revenue was $58.3M, down from $66.4M in Q2-2023; H1-2024 revenue was $123.0M, down from $148.1M year-over-year.

• Net income attributable to shareholders was $8.9M in Q2-2024 (vs $11.4M in Q2-2023); adjusted EBITDA was $20.5M in Q2-2024 (vs $31.5M in Q2-2023).

• Cash at quarter-end was $11.4M, with $4.9M of senior debt repaid and a $19.8M bridge loan drawn in May 2024.

• Free cash flow was negative $17.0M in Q2-2024 (vs positive $8.0M in Q2-2023); quarterly operating cash flow before working capital changes was $15.3M.

• Revenue, earnings, and cash flows declined sequentially due to lower production and higher costs, partially offset by a higher realized gold price of $2,334/oz.

Outlook and guidance

• 2024 gold production guidance remains 110,000–125,000 ounces at AISC of $1,300–$1,375/oz, with production weighted to H2-2024 as higher-grade southern pits are accessed.

• H2-2024 expected to see increased production and lower AISC as mining shifts to higher-grade, softer ore in the south and grid power reliability improves.

• Hard rock expansion to drive production to 175,000–185,000 ounces by 2026, with further growth potential to 225,000–250,000 ounces per year in later stages.