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ORION MINERALS LIMITED - Orion progresses post BFS optimisation work on the Prieska Copper-Zinc Project, South Africa

Release Date: 03/12/2019 08:20
Code(s): ORN     PDF:  
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Orion progresses post BFS optimisation work on the Prieska Copper-Zinc Project, South Africa

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”)

Orion progresses post BFS optimisation work on the Prieska Copper-Zinc Project, South Africa

- Positive results from the ongoing value engineering and optimisation studies are now being
  incorporated into the Prieska Project Bankable Feasibility Study (BFS) financial analysis.

- These optimisation studies, which will culminate in an updated BFS in Q1 CY2020, highlight the
  opportunity for an expanded and enhanced Prieska Project development scenario.

- Financing initiatives to develop the Prieska Project are being stepped up, with Orion now in discussions
  with several financial institutions that have submitted written expressions of interest to provide project
  debt finance.

Orion Minerals Limited (ASX/JSE: ORN) (Orion or the Company) is pleased to announce that positive results from
ongoing value engineering and optimisation studies on the Prieska Copper-Zinc Project (Prieska Project) are
currently being incorporated into an optimised Bankable Feasibility Study (BFS). The optimisations expand and
improve the already compelling BFS financial case for the Prieska Project, that was initially released on 26 June

The Company is also progressing negotiations with various parties to secure the total funding requirements for
the development of the Prieska Project. Written expressions of interest have now been received from seven
banks to provide senior secured project debt financing. In addition, several proposals for provision of mezzanine
debt and equity investment at asset level have also been received, from parties interested in securing future
product off-take.

Several expressions of interest have also been received from potential strategic investors, who are interested in
partnering via significant equity participation in Orion’s mine operating subsidiary companies. These discussions
will be progressed in parallel with the project finance negotiations.

Feasibility Study Optimisation Process
Rated as one of the world’s top-30 Volcanic Massive Sulphide (VMS) deposits, the Prieska Project contains a
VMS Resource totalling 30.49Mt at 1.2% Cu and 3.7% Zn, including Indicated Mineral Resources of 19.13Mt at
1.18% Cu and 3.59% Zn (refer ASX release 15 January 2019). The Mineral Resources remain open both along
strike and at depth and forms part of a highly prospective base metal belt, where Orion holds a commanding
mineral rights position.

Orion completed a positive BFS in June 2019 based on a modern, 2.4Mtpa underground and open pit mining
operation, with a 10-year “Foundation Phase” mining 20.8Mt and delivering payable metal production of
189,000t of copper and 580,000t of zinc in differentiated concentrates, with strong economics including
undiscounted free cash-flows of A$1.1 billion pre-tax, a project NPV8% of A$574M and peak a funding
requirement of A$378M (refer ASX release 26 June 2019).

Further to the recent announcements, value engineering and optimisation work has continued since the
completion of the BFS (refer ASX release 31 October 2019). These studies are now nearing completion and
results from these studies are being incorporated into the project development plans. Results of these
optimisation studies have the potential to reduce pre-production capital, significantly extend the planned mine
life and further improve project economics.

Key studies which are now at an advanced stage and are being incorporated into the optimised and updated
BFS include:
  -   water treatment trials investigating supplementary means of dealing with the water to be pumped from
      the underground workings, so that the dewatering timeline and costs can be reduced;
         o   Technical assessment and pilot plant trials now materially complete;
         o   Detailed engineering design and capital costing underway;
  -   value engineering of the ore processing plant designs and layouts to reduce both capital and operating
         o   Capital costs reduction assessed at A$15.3M (~ZAR153M);
         o   Operating costs reduction being determined; and
  -   mine-to-market enterprise optimisation of the Foundation Phase mining plan, in order to optimise the mine
      plan, scheduling and operating parameters to realise maximum financial returns from the Prieska Project.

The optimised and updated BFS is now due for completion in Q1 2020, with the expectation of reduced pre-
production capital and thus financing requirement.

Project Financing
In preparation for the Prieska Project development, discussions are advanced with several parties in respect of
both debt and equity funding for the construction and commissioning of the Prieska Project,

Orion’s appointed debt advisor, Endeavour Financial, has received formal expressions of interest from seven
banking institutions, several construction groups, and product offtake finance groups. It is anticipated the
financing process will be finalised following completion of the value engineering and optimisation studies and
updated BFS.

With respect to the equity portion of the Prieska Project funding, Orion is now investigating a number of options
due to unsolicited approaches made by interested parties who could enhance project value through the
provision of technical and financial input. The potential positive impact of operational synergies that may be
achieved through investment by strategic partners, thereby reducing the equity amount to be provided by
Orion, is currently being assessed as an alternative funding source.

Orion’s Managing Director and CEO Errol Smart, commented:
“The Prieska Project continues to demonstrate pleasing upside as we add final touches pre-development. These
improvements to an already robust business case allow us to leverage and structure the project finance for the
maximum benefit of Orion shareholders.
The interest that we are now enjoying from established mining companies as they recognise the quality and
growth potential of this project with its modern, high efficiency mining focus is encouraging. There may well be
unexpected synergies emerging that need to be considered as we work out how to maximise our shareholder

For and on behalf of the Board,

Errol Smart
Managing Director and CEO

3 December 2019


Investors                                   Media                                        JSE Sponsor
Errol Smart – Managing Director & CEO       Nicholas Read                                Rick Irving
Denis Waddell – Chairman                    Read Corporate, Australia                    Merchantec Capital
T: +61 (0) 3 8080 7170                      T: +61 (0) 419 929 046                       T: +27 (0) 11 325 6363
E:                E:             E:

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Melbourne, VIC, 3000


This release may include forward-looking statements. Such forward-looking statements may include, among other things,
statements regarding targets, estimates and assumptions in respect of metal production and prices, operating costs and results,
capital expenditures, mineral reserves and mineral resources and anticipated grades and recovery rates, and are or may be
based on assumptions and estimates related to future technical, economic, market, political, social and other conditions.
These forward-looking statements are based on management’s expectations and beliefs concerning future events. Forward-
looking statements inherently involve subjective judgement and analysis and are necessarily subject to risks, uncertainties and
other factors, many of which are outside the control of Orion. Actual results and developments may vary materially from those
expressed in this release. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-
looking statements. Orion makes no undertaking to subsequently update or revise the forward-looking statements made in this
release to reflect events or circumstances after the date of this release. All information in respect of Exploration Results and
other technical information should be read in conjunction with Competent Person Statements in this release (where
applicable). To the maximum extent permitted by law, Orion and any of its related bodies corporate and affiliates and their
officers, employees, agents, associates and advisers:
-     disclaim any obligations or undertaking to release any updates or revisions to the information to reflect any change in
      expectations or assumptions;
-     do not make any representation or warranty, express or implied, as to the accuracy, reliability or completeness of the
      information in this release, or likelihood of fulfilment of any forward-looking statement or any event or results expressed or
      implied in any forward-looking statement; and
-     disclaim all responsibility and liability for these forward-looking statements (including, without limitation, liability for


Date: 03-12-2019 08:20:00
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