JOHANNESBURG (miningweekly.com) – ASX- and JSE-listed Orion Minerals has raised an additional A$11-million through a share placement so that it can accelerate on all fronts.
This equity capital raising funds the company beyond the bankable feasibility study (BFS) to progress its Prieska zinc/copper project, in South Africa's Northern Cape province, and enables it to continue with regional exploration.
“Our view has always been that the base project, the Prieska project, is already great as a standalone project, but what sets Orion Minerals aside from its international peers is the regional exploration upside,” Orion CEO Errol Smart told Mining Weekly Online in an exclusive telephone interview.
“We set out to pursue this on both fronts at the same time. We were sufficiently cashed up from the sale of our Australian assets and the $5-million that we’d taken from Independence group last month.
“That would have carried us through to the bankable feasibility study, but we really want to accelerate on all fronts, so that’s why we decided to raise additional money, because the one thing that’s really been the cornerstone of our success is that when our main shareholder Tembo got involved, they took a look at the project and they said look you could either do this slowly or believe in the project and make sufficient capital available so that we could go at a rate far faster than I think any junior has gone in South Africa for many years,” he said.
The fast-moving company, which began drilling deep holes a year ago, has already completed 62 000 m of diamond drilling. It currently has 19 drilling rigs in action that produce more than 600 m of drill core a day.
“Managing all of that costs a pretty penny but the success that we’ve had out of the drilling is just phenomenal. It has been great for our investors who saw the opportunity early,” he said.
The target date for the BFS has now been extended out from October to the end of the year, hopefully before Christmas.
“Now that we’ve drilled a much larger Jorc resource than what we expected to do when we first set out, we’re also looking to doing an upscale on the production scope to get an optimised net present value of the project. Now that we’ve got 29.5 t of Jorc-compliant resource and it still remains open, we really have to look at an upscaled project, which is why we’re having to do this very intense drilling programme so that we have at least ten years worth of reserve in hand when we complete the bankable study,” he told Mining Weekly Online.
Meanwhile, Orion’s regional exploration programme that makes use of the latest available technology is doing well in an area last explored in the 1980s.
“The work that we’ve been doing with the high-powered SkyTEM surveys - that’s lighting up like a Christmas tree for us; because it’s not rocket science as such and is nothing people don’t normally do overseas, it’s just something that is very seldom done in South Africa. People here don’t go through the methodology that geologists and explorationists use overseas,” Smart added.
The company said on Monday that the shares, priced at 3.7c each, would be placed in two tranches, with the first consisting of 91.6-million shares, to be conducted under Orion’s existing placement capacity. The second tranche of 205.7-million shares will be subject to shareholder approval, at a general meeting planned for early August.
“We are delighted with the support received from new and existing shareholders and welcome a number of new institutional investors to the register,” said Orion chairperson Denis Waddell.
In addition to the share placement, Orion shareholder Tembo Capital Mining and its affiliated entities will also subscribe for a further A$6.3-million in Orion shares, at an issue price of 3.7c each. The share placement will see Tembo’s interest in Orion increase to an ultimate 22.99%.
The issue of shares to Tembo will be subject to shareholder approval.
“The quality of support for the placement signals the change in investment grade of the company as it moves closer to its production goals. The placement, in addition to the recent sale of the company’s Queensland tenement to Evolution Mining for A$2.5-million, a A$5-million share placement to Independence Group, and the A$6.3-million share placement to Tembo, significantly strengthens the company’s financial position for future growth,” said Waddell.