The Industrial Development Corporation of South Africa (IDC) has struck a deal with copper developer Orion Minerals to fund 43.75% of the predevelopment costs and facilitate black economic enterprise (BEE) ownership at the Okiep project, in the Northern Cape province.
Under the terms of the agreement, the IDC will become a major shareholder in the New Okiep Mining Company (NOM), alongside Orion, which will hold 56.25% of NOM’s ordinary shares.
On becoming a shareholder, the IDC will advance its share of the R79.03-million total budgeted predevelopment operating costs of NOM.
Orion MD and CEO Errol Smart said with Orion already having contributed R44.58-million, representing 56.25% of the pro-rata total predevelopment budget, the IDC has now agreed on the key commercial terms on which it will fund the balance of the budget to complete feasibility studies by June 2023.
“Following hard on the heels of [the] announcement regarding the grant of the South African Tantalum Mining (SAFTA) mining right for the Flat Mines area at Okiep, we are delighted to have reached agreement on the key principles for both the inclusion of Mining Charter 2018 historically disadvantaged South African (HDSA) structures and for the IDC to contribute 43.75% of the total budgeted predevelopment costs for NOM, marking a significant step towards the broader commercial development of the Okiep copper project,” said Smart.
“Having also received the long-awaited grant of the mining right to the core area, we are finally able to complete the required drilling and metallurgical sampling to finalise the optimisation of the feasibility studies, which are already well advanced.
“The future ownership of NOM with high-quality development partners, such as the IDC, Lulamile Xate and our employees and host community, puts the Okiep project on a very solid footing for the near-term development of what we expect to be a very exciting brownfield copper mining project.”
Orion and the IDC anticipate finalising and executing the definitive agreements for the IDC share acquisition and predevelopment funding arrangements by the end of this month, with the IDC funding to flow next month, subject to fulfilment of conditions precedent standard for such arrangements.
The IDC funding of predevelopment costs in the amount of R34.5-million will be advanced to NOM on the same terms as the predevelopment funding amount of R44.4-million already advanced by Orion to NOM.
A 2021 scoping study into the project estimated that the 780 000 t/y operation could have a mine life of nearly 12 years, producing 386 000 t/y of copper concentrate. The study estimated that the project would require a capital investment of A$53-million, and would have a post-tax net present value of A$114-million and an internal rate of return of 37%.
Feasibility studies to upgrade the scoping study economics are well advanced, and targeted for completion in the third quarter of next year.