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Orion Commences Partnering Process for 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 Commences Partnering Process for the Prieska Copper-Zinc Project, South Africa
- Orion Minerals has received expressions of interest from third parties in relation to the potential
acquisition of, or subscription for, a significant project-level ownership interest at its flagship Prieska
Copper-Zinc Project in South Africa, prompting it to commence a formal process to consider a range
of potential transactions.
- Macquarie Capital has been appointed as financial adviser to run the formal partner financing
process on behalf of Orion Minerals.
- The decision to undertake a process also follows the positive results from the ongoing value
engineering and optimisation work being undertaken on the Prieska Project Bankable Feasibility
Study.
- These studies, which are due for completion and independent sign-off in early Q2 CY2020, have
highlighted the opportunity for an expanded and improved project development which takes into
consideration the substantial upside in the Prieska Project.
- Orion is targeting the completion of a transaction during Q3 CY2020, following completion of the BFS
Optimisation in early Q2 CY2020.
- Orion cautions that there is no certainty that any transaction(s) will be completed.
Orion’s Managing Director and CEO Errol Smart, commented:
“Prieska is a high-quality base metal asset of global significance, and we believe there are a number of
significant benefits from evaluating alternative funding and development pathways that could include the sale
of a project-level strategic equity interest. Given the size of the deposit, the scale of the development
opportunity and the quality of the metal concentrates, Prieska is already attracting significant interest from a
number of parties.
“We believe that identifying and engaging with the right partner could help us to unlock the full potential of this
world-class deposit and ultimately deliver an integrated funding and development package that will minimise
dilution for Orion shareholders while retaining significant exposure to the substantial cash-flows that will be
generated by a long-life base metal operation.
“We have already held discussions with a number of parties that could bring technical, financial, corporate and
strategic expertise to the table. We are looking forward to engaging formally with these and other parties over
the coming months to see if we can crystallise a transaction that would generate a positive outcome for all
stakeholders, and help to fast-track the development of a substantial new-generation African base metals
mine.”
Orion Minerals Limited (ASX/JSE: ORN) (Orion or the Company) is pleased to announce that it has commenced a
partnering process which contemplates the introduction of a strategic project-level equity partner/ investor in its
flagship Prieska Copper-Zinc Project (Prieska Project), in South Africa.
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 an Indicated Mineral Resource of 19.13Mt at 1.18%
Cu and 3.59% Zn (refer ASX release 15 January 2019).
The Mineral Resource remains 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.
The Prieska Project is located in the Northern Cape Province of South Africa and has access to significant local
and regional infrastructure. It is a brownfields project site which was mined previously in the 1970s and 1980s by
Anglovaal, with historical production of over 430,000t of copper and 1Mt of zinc from 46.8Mt of sulphide ore
milled.
Orion completed a positive Bankable Feasibility Study (BFS) in June 2019 focused on the development of the
Deep Sulphide Resource, currently comprising 28.73Mt at 1.2% Cu and 3.8% Zn (refer ASX release 26 June 2019).
The BFS was based on a modern, 2.4Mtpa underground and open pit mining operation, with a 10-year
“Foundation Phase” delivering payable metal production of 189,000t of copper and 580,000t of zinc in
differentiated concentrates. The project has strong economics including undiscounted free cash-flows of A$1.1
billion pre-tax, a pre-tax project NPV8% of A$574 million and peak funding requirement of A$378 million.
The BFS is based on a mine plan of 20.8Mt milled, at 1.1% copper and 3.4% zinc and included mineral reserves of
13.62Mt at 1.1% copper and 3.2% zinc. Orion has identified significant mine plan optimisation and
resource/reserve extension opportunities, including over 9 million tonnes of Mineral Resources not incorporated in
the mine plan and existing mine pillars being assessed for future extraction, strike and dip extensions and
regional exploration potential.
As announced (refer ASX release 31 October 2019), ongoing value engineering and optimisation work being
undertaken since the completion of the BFS is delivering positive results, with key studies in progress including:
- Water treatment trials investigating supplementary means of dealing with the water to be pumped out
from the underground workings so that the dewatering timeline and costs can be reduced;
- Value engineering of the ore processing plant designs and layouts to reduce both capital and operating
costs; and
- Mine-to-market enterprise optimisation of the Foundation Phase mining plan, in order to optimise the
mine plan and operating parameters to realise maximum value from the Prieska Project.
Partnering Process
While progressing BFS optimisation studies, the Orion management team has been progressing debt and equity
funding discussions with a number of parties. Orion has also received unsolicited approaches from interested
parties which could potentially enhance project value through the provision of technical and/or financial
support.
In light of the potential of some of these approaches to increase overall project returns and limit Orion’s
requirement to provide equity financing, Orion has decided that it will run a formal process to engage with these
interested parties.
Should the process be successful, Orion will participate in the joint development of the Prieska Project – providing
the foundations for its transformation into a significant new mid-tier base metals mining company while at the
same time continuing to pursue exploration of the many exploration opportunities identified in the Areachap
Province in the Northern Cape Region of South Africa, which is highly prospective for copper, zinc and nickel.
The Company emphasises that it is not reliant on completing a transaction through the partnering process in
order to secure project funding to proceed with the development of the Prieska Project, and there is no
certainty that any transaction(s) will be completed.
Orion is targeting to complete the partnering process during Q3 CY2020, following completion of the value
engineering and optimisation process and the delivery of an updated BFS.
Completion of a transaction (if any) is likely to be subject to shareholder approval in accordance with the
Corporations Act and Listing Rules and the Company will keep the market informed as to any material
developments in accordance with its continuous disclosure obligations.
Orion has engaged Macquarie Capital to act as the Company’s financial adviser in relation to the transaction.
Macquarie Capital is the advisory, capital markets and principal investment arm of Macquarie Group, a leading
global financial institution. Macquarie Capital has a strong presence in South Africa, Australia, Europe and Asia.
For and on behalf of the Board.
Errol Smart
Managing Director and CEO
23 January 2020
ENQUIRIES
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: info@orionminerals.com.au E: nicholas@readcorporate.com.au E: rick@merchantec.co.za
Disclaimer
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 (including Macquarie Capital):
- 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
negligence).
Macquarie Advisory and Capital Markets South Africa Proprietary Limited is not an authorised deposit-taking institution for the
purposes of the Banking Act 1959 (Commonwealth of Australia), and its obligations do not represent deposits or other
liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide
assurance in respect of the obligations of Macquarie Advisory and Capital Markets South Africa Proprietary Limited.
Date: 23-01-2020 08:30:00
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