AFRICA — Juniors adopt survival strategies — Orezone, Birim among companies with promising projects

Africa could hardly be described as a hotbed of foreign exploration investment these days, but a few juniors are keeping their projects alive by maintaining the right mix of ingredients to attract what’s left of risk capital and senior company financing.

“We’re expecting things to go very well for us in Burkina Faso this year,” Ron Little, president of Orezone Resources (ORZ-M), says with a tone of optimism rarely heard in the post-Bre-X era. “We’ll announce either a financing, a joint venture, or a combination of the two within the next two months.”

What makes Orezone stand out in a climate of highly selective exploration investment?

First, the company has a well-respected and diversified team of advisors, including Donald Worth, former head of the mining department at the Canadian Imperial Bank of Commerce; Robert McEwen, chief executive officer of Goldcorp (G.A & G.B-T); and Herb Helmstaedt, professor of geology at Queen’s University.

Secondly, Orezone’s Kerboule permit in Burkina Faso lies on the same structure as the Belahoura project, where Australia’s Broken Hill Proprietary (BHP-N) and compatriot Resolute Samantha are drilling off a multi-million-ounce gold resource. Orezone is earning a 75% interest in Kerboule by making payments of US$200,000 and spending US$1 million on exploration before April 2001.

Both Kerboule and Belahoura are in the Djibo greenstone belt, near the border with Mali. Mineralization is controlled by a major shear zone, and, at Kerboule, trenching on a series of quartz veins and surrounding stockworks returned up to 1.02 grams per tonne over 42 metres.

The company also boasts a strong balance sheet consisting of $500,000 in cash, fewer than 10 million shares outstanding and a market capitalization of just over $4 million.

“They’ve got the brains, the property has geological merit, and, out of all the projects I’ve seen in Africa, I think they’ve got the best situation,” says Canaccord Capital’s Glenn Brown, who recently recommended Orezone as a speculative buy for risk accounts.

Brown does have some concerns about political risk in Burkina Faso, which received a below-average score on the Index of Economic Freedom, a joint annual publication of the Heritage Foundation and the Wall Street Journal.

The index, intended as a tool for policy-makers and investors, measures factors such as taxation, government intervention and property rights to determine the relative “economic freedom” of 161 countries. The higher the score, the less the economic freedom. Burkina Faso was given a score of 111 (out of 160) on the 1999 index.

But Little disputes the ranking, arguing that the logistics of exploration in Burkina Faso are the best in West Africa.

“I don’t want to say too many good things, because we’re having a good time getting properties and getting around without much competition,” he says. “But I think Burkina Faso is a hidden gem, mainly because the infrastructure is so good.”

The roads and power supply are less reliable in Ghana, Burkina’s neighbour to the south, even though that country is considered among the most favorable countries in Africa for gold exploration and scored 72 on the economic freedom index.

Certainly Ghana’s history of gold production and political stability has attracted numerous foreign mining companies this decade, including Montreal-based junior Birim Goldfields (BGI-T).

Birim’s most advanced project is the Dunkwa property, where Battle Mountain Gold (BMG-N) has spent close to the US$5 million required to earn a 65% interest.

Birim President Denis Simoneau is excited about the potential for the company’s 7,000-sq.-km Bui concessions, north of Dunkwa.

“Bui hosts the rock units that encompass all of Ghana’s gold production, namely the Ashanti-style and the conglomerate environment,” says Simoneau. “We have the second-largest depository of Tarkwaian conglomerates in the country.”

A recent infill soil sampling program on a 10-km-long, anomalous stretch of the Brohani Ridge conglomerates at Bui returned values greater than 1 gram per tonne in 44 of 162 samples. In the next phase, four specific targets will be tested with a closely spaced trenching program, followed by diamond drilling.

Birim also has a healthy treasury of $1 million and a strong technical team in Ghana headed by Victor King, a former senior geologist for South African-based Gold Fields (GLDFY-Q). King supervised the exploration effort that outlined a multi-million-ounce gold resource at Gold Fields’ Tarkwa mine.

Tarkwa started up last year, and Gold Fields is expecting to expand production to 250,000 oz. per year by mid-1999.

Simoneau says Birim has signed confidentiality agreements with seven senior companies who are sizing up the junior as either a takeover target or as a “cheap shot at West Africa.

“Here’s an opportunity for seniors to go ahead in alliance with a junior who can be the eyes and ears of the major company, in an area they are not keen to go to themselves,” says Simoneau.