PERTH (miningweekly.com) – A scoping study into the Okiep copper project, in the Northern Cape of South Africa, has confirmed the potential for early cash flow.
Copper developer Orion Minerals completed a scoping study on the Okiep project as part of its due diligence programme under an option agreement to acquire the Okiep project.
“The outcome of the scoping study supports the economic merit of developing a foundation phase mining operation while Orion conducts the required work and engineering studies to evaluate the potential to re-establish mining operations with outputs as were previously sustained for decades by previous owners,” said Orion MD and CEO Errol Smart, who noted that Newmont had managed to produce between 30 000 t/y and 40 000 t/y of copper from the asset.
“Most importantly, we now have a benchmark for determining the potential economic merit of the 25 targets prioritized by Orion, which have historical mineral resources in place that were not mined.
“Thus far we have successfully verified and reported Joint Ore Reserves Committee-compliant resource for an initial six deposits, with this study now providing guidance for the targeted cut-off grades for openpit and underground mining that are required for these deposits to be of economic merit.”
Orion in February inked an option to acquire a 56.25% interest in Southern African Tantalum Mining (Safta), which owns the Okiep copper complex, for A$7.5-million of initial purchase consideration, and a further A$8.5-million of additional consideration, subject to future exploration success.
The scoping study was based on five initial deposits, and found that first production was possible within 16 months of the start of construction.
The scoping study into the Okiep project has now estimated that peak funding requirements for the project would reach A$58-million, with peak annual production reaching 9 000 t/y of copper-in-concentrate, potentially supplementing the 22 000 t/y of copper production planned from Orion’s flagship Prieska copper/zinc project.
The study estimated average annual undiscounted free cash flows of A$32-million post tax, and all-in sustaining costs of $4 478/t.
The proposed foundation scale mining operations could run for 12 years, at a design process plant throughput rate of 760 000 t/y, with both underground and surface mining methods to be used.
Smart said on Monday that while the five deposits included in the foundation phase scoping study had significantly lower grade than the historical average mining grade in the district, the lower-grade remnant mineralisation presented an attractive early production opportunity.
“Given the strong copper market conditions and the potential for further price escalations given very firm global demand fundamentals, we believe the potential for early profitable production from a small-scale foundation phase is very encouraging, particularly given the scoping study assumes a conservative copper price of $7 600/t compared with the recent prices of over $10 000/t.
“In addition, the presence of a highly regarded partner such as the Industrial Development Corporation, which currently holds 43.8% of Safta and shares Orion’s values of sustainable mining development and high environmental and social governance standards, is also a very important consideration for this potential investment.”
Smart said that based on the strength of the scoping study results, Orion was pressing ahead to complete the final due diligence programmes at Okiep, with a final decision on the project acquisition expected by the end of July.