Name of the Project
Prieska zinc/copper project.

Location
Northern Cape, South Africa.

Client
Orion Minerals.

Project Description
The project aims to establish new mining operations at the Prieska copper mine, which has been closed since 1991.

A scoping study, released in December 2018, has confirmed the potential for the Prieska project to become a significant near-term, low-cost, zinc and copper concentrate producer while laying the foundations for future opportunities.

Phase 1 excludes any openpit mining and historical pillar extraction, and does not exhaust all known deposit extensions.

The study envisages a 2.4-million-tonne-a-year operation, producing about 70 000 t/y to 80 000 t/y of zinc and 22 000 t/y of copper concentrates.

The project is estimated to hasve an initial mine life of ten years.
 

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at a 12.5% discount rate, of between A$400-million and A$440-million and an internal rate of return of 38%, with a payback of less than three years from first production.

Value
Between A$300-million and A$330-million will be required to complete the project.

Duration
Project construction is expected to start in the fourth quarter of 2019, with production expected to start in 2021.

Latest DevelopmentsOrion Minerals has found a formula to achieve empowerment that puts all shareholders at full participation and contribution.

The proposed transactions will introduce a high-profile South African black economic-empowerment (BEE) investor group to Orion’s share registry in an $8-million capital raising and a restructuring of the company’s BEE equity participation.

Black South African investors have supported the equity raising at a 29% premium and achieved accelerated compliance with the ownership aspects of Mining Charter 3, which precedes the company’s obtaining a mining right for its Prieska zinc/copper project, in the Northern Cape, and the delivery of the project’s bankable feasibility study (BFS) later this quarter.

The funds raised will be used to finalise the Prieska BFS and go towards continued exploration at Orion’s prospective tenements in the Northern Cape.

Black South African investors subscribed for $4-million in the placement, including $2-million subscribed for by investors who have signed a memorandum of understanding to become BEE partners at the Prieska project level, through BEE HoldCo. These include Black Star Minerals principals Jowell Tobias, his wife, Johanna Tobias, and Sharon Matthews, with 67% ownership, and Kolobe Nala Investment principal Billy Mawasha, with 33% ownership. BEE HoldCo members have demonstrated their commitment and financial capacity to complete the transaction by subscribing for $2-million in the placement of shares.

Top South Africans joining the Orion board as part of the transaction are former Anglo American Coal CEO Godfrey Gomwe and former senior BHP Billiton executive Tom Borman.

In addition to the placement, founding BEE partners are to exchange their shares at Prieska project level for Orion shares, and the new BEE partners are to acquire a 20% holding at the Prieska project level, as well as fund their proportionate share of the project development costs.

As the company is expecting its mining right to be granted in the next month or two, everything has to align to prepare it to build a mining operation.

The company has had excellent inherited BEE partners that have brought it to where it is as an exploration company, but it is now at a stage of entering large capital expenditure of R3-billion to rebuild the mine.

The founding BEE partners that have brought Orion to this point are to be rewarded by having their shares elevated to the listed company level.

This will mean that, for the first time, these founding BEE shareholders will hold listed equity.

The new group of incoming BEE shareholders have invested in a way that enables them to level-peg with international investors and also hold BEE shareholdings at the mining right level.

Being one of the few companies with a pending mining right, Orion has five years to achieve new Mining Charter compliance but has elected instead to achieve compliance immediately.
 

Key Contracts and Suppliers
Orion Mining, DRA Projects, Fraser McGill, METC Engineering, Precision Capital Development Services, Bluhm Burton Engineering, METS South Africa, ABS Africa, Z* Star Mineral Resource Consultants and the MSA Group (scoping study).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Orion Minerals, tel +27 11 880 3159 or email info@orionminerals.com.au.