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ORION MINERALS LIMITED - Appendix 5B

Release Date: 31/01/2019 09:10
Code(s): ORN     PDF:  
Wrap Text
Appendix 5B

Orion Minerals Limited
Incorporated in the Commonwealth of Australia
Australian Company Number 098 939 274
ASX share code: ORN
JSE share code: ORN
ISIN: AU000000ORN1
(“Orion” or “the Company”)

APPENDIX 5B


Mining exploration entity and oil and gas exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10,
01/05/13, 01/09/16


 Name of entity
 Orion Minerals Ltd
 ABN                                                              Quarter ended (“current quarter”)
 76 098 939 274                                                   December 2018

 Consolidated statement of cash flows                               Current quarter            Year to date
                                                                         $A’000                  (3 months)
                                                                                                     $A’000
 1.    Cash flows from operating activities
 1.1   Receipts from customers                                              ---                         ---
 1.2   Payments for
       (a) exploration & evaluation                                  (3,131)                      (10,323)
       (b) development                                                      ---                         ---
       (c) production                                                       ---                         ---
       (d) staff costs                                                  (515)                        (871)
       (e) administration and corporate costs                           (852)                       (1,415)
 1.3   Dividends received (see note 3)                                      ---                         ---
 1.4   Interest received                                                  14                            75
 1.5   Interest and other costs of finance paid                         (324)                       (1,318)
 1.6   Income taxes paid                                                    ---                         ---
 1.7   Research and development refunds                                     ---                         ---
 1.8   Other (provide details if material)                                  ---                         ---
 1.9   Net cash from / (used in) operating                           (4,808)                      (13,852)
       activities


 2.     Cash flows from investing activities
 2.1    Payments to acquire:
        (a) property, plant and equipment                                   ---                         ---
        (b) tenements (see item 10)                                         ---                         ---
        (c) investments                                                     ---                         ---
        (d) other non-current assets                                        ---                        (30)

Consolidated statement of cash flows                              Current quarter         Year to date
                                                                       $A’000               (3 months)
                                                                                                $A’000
2.2    Proceeds from the disposal of:
       (a) property, plant and equipment                                  ---                      ---
       (b) tenements (see item 10)                                        500                    2,500
       (c) investments                                                    ---                      ---
       (d) other non-current assets                                       ---                      ---
2.3    Cash flows from loans to other entities                            ---                      ---
2.4    Dividends received (see note 3)                                    ---                      ---
2.5    Other (provide details if material)                                ---                      ---
2.6    Net cash from / (used in) investing                                500                    2,470
       activities



3.     Cash flows from financing activities
3.1    Proceeds from issues of shares                                     ---                  14,509
3.2    Proceeds from issue of convertible notes                           ---                      ---
3.3    Proceeds from exercise of share options                            ---                      ---
3.4    Transaction costs related to issues of                             ---                   (394)
       shares, convertible notes or options
3.5    Proceeds from borrowings                                           ---                      ---
3.6    Repayment of borrowings                                            ---                  (5,498)
3.7    Transaction costs related to loans and                             ---                      ---
       borrowings
3.8    Dividends paid                                                     ---                      ---
3.9    Other (provide details if material)                                ---                      ---
3.10   Net cash from / (used in) financing                                ---                   8,617
       activities


4.     Net increase / (decrease) in cash and
       cash equivalents for the period
4.1    Cash and cash equivalents at beginning of
       period                                                       6,354                       4,811
4.2    Net cash from / (used in) operating                          (4,808)                  (13,852)
       activities (item 1.9 above)
4.3    Net cash from / (used in) investing activities                500                        2,470
       (item 2.6 above)
4.4    Net cash from / (used in) financing activities                     ---                   8,617
       (item 3.10 above)
4.5    Effect of movement in exchange rates on                       (12)                         (12)
       cash held
4.6    Cash and cash equivalents at end of                          2,034                       2,034
       period
5.     Reconciliation of cash and cash                        Current quarter               Previous quarter
       equivalents                                                   $A’000                         $A’000
       at the end of the quarter (as shown in the
       consolidated statement of cash flows) to
       the related items in the accounts
5.1    Bank balances                                                   2,034                            6,354
5.2    Call deposits                                                       ---                             ---
5.3    Bank overdrafts                                                     ---                             ---
5.4    Other (provide details)                                             ---                             ---
5.5    Cash and cash equivalents at end of                             2,034                            6,354
       quarter (should equal item 4.6 above)


6.     Payments to directors of the entity and their associates                       Current quarter
                                                                                          $A'000
6.1    Aggregate amount of payments to these parties included in item 1.2                                172
6.2    Aggregate amount of cash flow from loans to these parties included                                  ---
       in item 2.3
6.3    Include below any explanation necessary to understand the transactions included in items 6.1 and
       6.2
Payments to directors and associates were on normal commercial terms. These payments represent
director fees and payments in terms of consultancy agreements with director-related entities.


7.     Payments to related entities of the entity and their associates                        Current quarter
                                                                                                       $A'000
7.1    Aggregate amount of payments to these parties included in item 1.2                                  ---
7.2    Aggregate amount of cash flow from loans to these parties included                                  ---
       in item 2.3
7.3    Include below any explanation necessary to understand the transactions included in items 7.1 and
       7.2




8.     Financing facilities available                  Total facility amount         Amount drawn at quarter
       Add notes as necessary for an                      at quarter end                                 end
       understanding of the position                          $A’000                                  $A’000
8.1    Loan facilities                                                  7,600                           2,100
8.2    Credit standby arrangements                                         ---                             ---
8.3    Other (please specify)                                           7,600                           7,600
8.4    Include below a description of each facility above, including the lender, interest rate and whether it
       is secured or unsecured. If any additional facilities have been entered into or are proposed to be
       entered into after quarter end, include details of those facilities as well.
       Note: Amounts above exclude capitalised interest and fees.

Convertible Note
On 17 March 2017, Orion Minerals Ltd (Company) issued 232,692,294 convertible notes each with a face
value of 2.6 cents, raising $6.05M (Notes). Key terms of the Notes are as follows:
 • Security: secured over certain assets of the Company and its subsidiaries.
 • Maturity Date: 17 March 2019.
 • Interest: 12% per annum calculated and payable quarterly in arrears.
 • Conversion: Noteholders may elect to convert part or all of their Notes at any time prior to the maturity
     date.
 • Conversion Price: 2.6 cents per fully paid ordinary share (Share).
 • Early redemption by the Company: Company may elect to redeem all or some of the Notes by notice
     to the noteholder, however the noteholder shall have the right, within 14 days of receipt of an early
     redemption notice from the Company, to convert the Notes the subject of the early redemption notice
     into Shares at the Conversion Price.
 • Early redemption by the noteholder: noteholders may require the Company to redeem the Notes if an
     event of default occurs and the noteholders by special resolution approve the redemption. At any time
     before the Maturity Date, a noteholder may elect to redeem and set off some or all of the Notes held
     by it for the redemption amount as part of an equity capital raising by the Company permitted by the
     note deed and in which the noteholder may have a right to participate in (Equity Raising), such that
     the redemption amount is set off against the amount payable by the Noteholder to subscribe for
     securities under the Equity Raising.
 • Redemption amount: the redemption amount is the outstanding facility amount with respect to each
     Note. If any Notes are redeemed by the Company within 12 months after their issue, an additional
     early repayment fee of 5% of the facility amount of the Notes being redeemed is payable by the
     Company.
Interest accrued at the end of the quarter was $0.2M. Further details of the key terms of the Notes are set
out in the Company’s 8 March 2017 ASX release.

Bridge Loan
On 18 August 2017, the Company announced that a $6.0M bridge loan facility had been agreed with
leading mining-focused private equity group Tembo Capital Mining Fund II LP (Tembo) (Bridge Loan
Agreement). Under the terms of Bridge Loan Agreement, the Company has agreed that it will use best
endeavours to undertake a capital raising by 31 December 2018, to raise additional equity to progress the
Prieska Project bankable feasibility study (BFS) and to continue its South African exploration programs.
The Company has also agreed that Tembo will be offered the opportunity to participate in the sub-
underwriting of any rights issue on standard market terms and conditions. The key terms of the Bridge
Loan Agreement are:
 • Bridge Loan Amount - Up to $6.0M, available in two $3.0M tranches;
 • Interest - capitalised at 12% per annum accrued daily on the amount drawn down;
 • Repayment – repayable on the earlier of 31 December 2018 and the completion of a capital raising(s)
     whether by way of a pro rata issue and/ or security purchase plan of Shares and/or a placement or
     placements of Shares undertaken by the Company to raise such amount as is required, in Tembo’s
     reasonable opinion, to progress the Prieska Project BFS, continue exploration programs at the
     Company’s South African projects and for working capital (Equity Capital Raising);
 • Equity Capital Raising - the Company will use its best endeavours to undertake an Equity Capital
     Raising before 31 December 2018. The Company shall procure that Tembo (or its affiliate) is offered
     the right to underwrite or sub-underwrite any pro rata issue and/or security purchase plan which form
     part of an Equity Capital Raising, on standard market terms and conditions;
 • Set-off under Entitlement Offer – repayment of the Bridge Loan will be set off against the amount to
     be paid by Tembo for the issue and allotment of Shares to Tembo under the Equity Capital Raising
     and/or at Tembo’s election against the underwriting amount payable by Tembo in respect of any
     shortfall under any ‘pro rata issue’ which form part of an Equity Capital Raising in its capacity as
     underwriter or sub-underwriter. Any surplus amount owing by Tembo after the set-off will be paid by
     Tembo in accordance with the terms of the relevant Equity Capital Raising and the underwriting
     arrangements (as applicable);
 • Establishment fee - capitalised at 6.67% of the Bridge Loan facility amount; and
 • Security - the Bridge Loan is unsecured.

As at 31 December 2018, the balance of the Bridge Loan Facility was $0.61M (including capitalised
interest). For further information, refer to the Company’s Full Year Statutory Accounts for financial year
ending 30 June 2018.
On 25 January 2019, the Company announced that a new $3.6M loan facility had been agreed with Tembo
(Loan Facility). The key terms of the Loan Facility are:
 • Loan Facility Amount: Up to $3.6M, available in two tranches. The first tranche is to be in one
    instalment of $0.6M to repay all amounts owing under the current Bridge Loan, with further tranches
    to be in minimum instalments of $1M each;
 • Interest: Capitalised at 12% per annum accrued daily on the amount drawn down;
 • Repayment: Tembo may elect for repayment of the Outstanding Amount to be satisfied by the issue
    of Shares by the Company to Tembo at a deemed issue price of 2.6 cents per Share, subject to
    receipt of Shareholder approval. The Outstanding Amount must be repaid by 25 January 2020, or if
    Tembo elects to receive Shares in repayment of the Outstanding Amount in lieu of payment in cash,
    the date on which the Shares are to be issued to Tembo (or such later date as may be agreed between
    Tembo and Orion);
 • Establishment fee:
     o Cash - capitalised 5% of the Loan Facility Amount, payable on the Repayment date; and
     o Options - 11M unlisted Orion options, exercisable at a price of 3.0 cents per option, expiring on
         the date which is 5 years after the date of issue of the options, provided that Orion's obligation to
         issue Shares on exercise of the options is subject to receipt of shareholder approval.
 •  Security: Loan Facility is unsecured.

Redeemable Preference Shares
A subscription agreement was entered into between Repli Trading No 27 (Pty) Ltd (Repli) (a 73.33% owned
subsidiary of Agama Exploration & Mining (Pty) Ltd (Agama)) and Anglo American Sefa Mining Fund
(AASMF) on 2 November 2015. Under the terms of the agreement, AASMF subscribed for 15,750,000
Repli redeemable preference shares at a subscription price of ZAR1 per redeemable preference share.
The key terms of the agreement are as follows:

•    15,750,000 cumulative redeemable non-participating preference shares;
•    Subscription price ZAR15.75M;
•    Dividend rate – prime lending rate in South Africa;
•    Dividend payment – dividends accrue annually based on the subscription price. Fifty percent of the
     dividends which have accrued and accumulated from the date of issue until 2 years after the
     Copperton Project mining right (Mining Right) has been issued shall become due and payable on the
     scheduled dividend date (approximately 4 years after the issue date). Balance of the accrued and
     accumulated dividends to be paid at the relevant redemption date;
•    Redemption date is the earlier of 7 years after the issue date or 4 years after the Mining Right has
     been issued;
•    Redemption amount consists of:

     o    ZAR15.75M;
     o    any unpaid and accumulated dividends; and
     o    Settlement premium based on IRR of 13.5%, taking into account all cash flows from the
          preference shares in order to get an overall IRR of 13.5% (IRR is fixed for the duration that the
          preference shares are outstanding).
•    Preference shares are unsecured, but AASMF will hold 26% voting rights in Repli in the event that
     there is a default on the part of Repli;
•    Funding to principally used for a 12 month exploration program on the NW Oxide Zone and the use
     the results to update the scoping study.

On 5 November 2015, AASMF paid the subscription price of ZAR15.75M (~$1.54M) to Repli and the
preference shares were issued to AASMF by Repli. As at 31 December 2018, the provision for dividends
and settlement premium totalled $0.76M (ZAR7.74M) (effective rate 13.5%). For further information, refer
to the Company’s Full Year Statutory Accounts for financial year ending 30 June 2018.

AASMF Loan
On 2 November 2015, Repli and AASMF entered into a loan agreement for the further exploration and
development of the Copperton Project. Under the terms of the loan, AASMF shall advance ZAR14.25M to
Repli. The key terms of the agreement are as follows:
 • Loan amount ZAR14.25M;
 • Interest rate will be the prime lending rate in South Africa;
 • The disbursement of the loan will be subject to AASMF notifying Repli that it is satisfied with the results
    of the updated scoping study;
  •     Repayment date will be the earlier of 3 years from the date of the advance or on the date which Repli
        raises any additional finance for the further development of the Copperton Project; and
  •     On the advancement of the loan, 29.17% of the shares held in Repli by the Agama group (a wholly
        owned subsidiary of the Company), will be pledged as security to AASMF for the performance of
        Repli's obligations in terms of the loan.
 On 1 August 2017, Repli drew down on the AASMF Loan in full (ZAR14.25M (~$1.56M). For further
 information, refer to the Company’s Full Year Statutory Accounts for financial year ending 30 June 2018.
 Interest accrued at the end of the quarter was $0.1M.

 9.        Estimated cash outflows for next quarter                                                        $A’000
 9.1       Exploration and evaluation (refer to item 8 regarding loan facilities                            3,200
           available to the Company)
 9.2       Development                                                                                        ---
 9.3       Production                                                                                         ---
 9.4       Staff costs                                                                                        ---
 9.5       Administration and corporate costs                                                                750
 9.6       Other (provide details if material)                                                                ---
 9.7       Total estimated cash outflows                                                                   3,950


 10.       Changes in                Tenement reference and          Nature of     Interest at   Interest at end
           tenements                 location                        interest      beginning     of quarter
           (items 2.1(b)                                                           of quarter
           and 2.2(b)
           above)
 10.1      Interests in  South Africa Prospecting Rights
           mining                                     ---
           tenements
                               QLD Exploration Licence
           and petroleum
           tenements                                  ---
           lapsed,              WA Exploration Licence
           relinquished                               ---
           or reduced
                                VIC Exploration Licence
                                                      ---
 10.2      Interests in  South Africa Prospecting Rights
           mining                                     ---
           tenements
                               QLD Exploration Licence
           and petroleum
           tenements                                  ---
           acquired or          WA Exploration Licence
           increased                                  ---
                               VIC Exploration Licence
                                                      ---

Compliance statement
1   This statement has been prepared in accordance with accounting standards and policies which
    comply with Listing Rule 19.11A.
2   This statement gives a true and fair view of the matters disclosed.



Sign here:.......   ..............       Date: 31 January 2019

(Company secretary)
Print name:   Martin Bouwmeester
Notes
1.    The quarterly report provides a basis for informing the market how the entity’s activities have been
      financed for the past quarter and the effect on its cash position. An entity that wishes to disclose
      additional information is encouraged to do so, in a note or notes included in or attached to this report.
2.    If this quarterly report has been prepared in accordance with Australian Accounting Standards, the
      definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB
      107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in
      accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the
      corresponding equivalent standards apply to this report.
3.    Dividends received may be classified either as cash flows from operating activities or cash flows from
      investing activities, depending on the accounting policy of the entity.



31 January 2019


ENQUIRIES

Investors                                                 JSE Sponsor
Errol Smart – Managing Director & CEO                     Rick Irving
Denis Waddell – Chairman                                  Merchantec Capital
T: +61 (0) 3 8080 7170                                    T: +27 (0) 11 325 6363
E: info@orionminerals.com.au                              E: rick@merchantec.co.za
Suite 617, 530 Little Collins Street
Melbourne, VIC, 3000


Media
Nicholas Read                                             Barnaby Hayward
Read Corporate, Australia                                 Tavistock, UK
T: +61 (0) 419 929 046                                    T: +44 (0) 207 920 3150
E: nicholas@readcorporate.com.au                          E: orion@tavistock.co.uk

Date: 31/01/2019 09:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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