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Updated Feasability Study Delivers Substantial Increases in Production, Cash Flow and Mine Life for Prieska Project
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”)
Updated Feasibility Study Delivers Substantial Increases in Production, Cash Flow and Mine
Life for the Prieska Copper-Zinc Project
Improved economics, operational efficiencies and enhanced sustainability credentials among the many other
significant benefits to be delivered from optimisation and value engineering
Shareholders are hereby advised that Orion Minerals Ltd (ASX/JSE: ORN) (Orion or the Company)
has released has released the outcomes of the updated Bankable Feasibility Study for the
Foundation Phase of its Prieska Copper-Zinc Project, located in the Northern Cape Province of
South Africa. The full announcement is available on the Company’s website,
www.orionminerals.com.au.
HIGHLIGHTS
Updated Bankable Feasibility Study (BFS) completed for a proposed new 2.4Mtpa copper and
zinc mining operation at the brownfields Prieska Project, located in the Northern Cape Province
of South Africa.
The updated BFS delivers numerous improvements on the previous study completed in June
2019, including:
o 43% increase in undiscounted free cash flows to AUD1.6 billion, pre-tax (AUD1.2 billion
post-tax);
o 36% increase in NPV (at an 8% discount rate) to AUD779 million, pre-tax (AUD552 million
post-tax);
o 5-month reduction in the capital payback period to 2.4 years;
o 6% decrease in all-in-sustaining costs to USD3,531/t (USD1.60/lb) of copper equivalent
metal sold;
o 3% increase in all-in-sustaining margin to 47%;
o 5% increase in pre-tax IRR to 39%;
o 9% increase in peak funding requirements to AUD413 million to cater for the operational
improvements; and
o peak annual production of 23kt of copper and 88kt of zinc in concentrates.
The life of mine is extended by 2 years to a duration of 12 years.
Total milled production increases by 20% to 25.2Mt at 1.0% Cu and 3.3% Zn (comprising 57%
Probable Ore Reserves, 10% Indicated Mineral Resources and 33% Inferred Mineral Resources),
with the plan now delivering more payable metal sold as differentiated concentrates, namely:
o 226kt of copper (a 20% increase); and
o 680kt of zinc (a 17% increase).
The updated BFS includes:
o A 30% decrease in the shaft dewatering timeline with the incorporation of a water
treatment plant;
o Cost savings from value engineered modifications to the processing plant layout
incorporating semi-autogenous grinding mills and removing multi-stage crushing; and
o Prioritising the extraction of higher grade (and confidence) Mineral Resources earlier in
the mine schedule.
Upside potential beyond the updated BFS includes:
o Improvements to the plant and concentrate grade recovery above the conservative
estimates applied in the BFS, to match historical plant performance;
o Extensions and additions to the Mineral Resources and mine life via:
• Conversion of delineated Inferred Mineral Resources into the mining plan;
• Extensional exploration and ‘out of resource’ mineralisation;
• Near-mine and satellite exploration potential; and
• Remnant pillar extraction.
o Partially completed mine-to-market optimisation studies present the potential for
refinements to be applied during the mine development and early production period.
Next steps, with the granting of the Integrated Water Use Licence and second mining right
imminent, are to advance:
o Project financing discussions;
o Project implementation planning; and
o Agreements with service providers for key early works activities.
Orion’s Managing Director and CEO, Errol Smart, commented:
“The completion of this updated BFS marks another key step towards the development of a modern
base metals mine at Prieska with the potential to become one of a new generation of world-class
mines in southern Africa.
“I would like to congratulate the entire Orion team, and our consultants and partners, for their
enormous efforts in completing the multiple work streams required to deliver this high quality BFS
amidst the challenges of the current Covid-19 lockdown.
“The substantial improvements achieved since the June 2019 BFS are reflected in the headline
numbers. The mine is now forecast to deliver AUD1.6 billion of pre-tax free-cash-flow over 12 years
and a pre-tax Net Present Value of AUD779 million (at an 8% discount rate), with the initial 12-year
LOM plan delivering an impressive 47% all-in-sustaining margin and underpinned by a robust mine
plan delivering more payable metal in differentiated high quality copper and zinc concentrates.
“The capital payback period has been reduced to less than two-and-a-half years from first
production on lower commodity price assumptions, even with the inclusion of water treatment and
offsite irrigation and assuming a more conservative construction schedule and build-up to first
production.
“In addition, the updated BFS has enhanced the Project’s environmental, social, and governance
outcomes. Sustainable development goals have been planned at the forefront increasing the use
of renewable energy and reducing the carbon footprint. Water conservation and recycling in the
dry and arid conditions at the Project is now maximised. The business plan provides a clear
roadmap for progressive 4IR adoption, which should deliver high productivity and personnel well-
being gains to our workforce.
“Meanwhile, there is further scope to significantly extend the mine life, given that the deposit
remains open both at depth and along strike. Potential satellite discoveries both near-mine and
within the broader region provides the opportunity to potentially operate in this district for many
decades to come.
“With the Prieska BFS update now complete, the development of the Prieska Project is ideally
positioned to play a vital role in the local economic recovery plan for the Northern Cape region.
The Project’s low exposure to imported materials and foreign labour reduces construction
challenges as the world overcomes and recovers from Covid-19.
“Prieska is well positioned to supply high-quality copper and zinc concentrates to the global market,
targeting a production start-up in 2024 as market conditions permit.”
For and on behalf of the Board.
Errol Smart
Managing Director and CEO
26 May 2020
ENQUIRIES
Investors Media JSE Sponsor
Errol Smart – Managing Director
Nicholas Read Rick Irving
& CEO
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
Competent Person’s Statements
The information in this report that relates to Exploration Results has been compiled under the supervision of Mr
Errol Smart, a Competent Person who is registered with the South African Council for Natural Scientific
Professionals, a ‘Recognised Professional Organisation’ (RPO). Mr Smart is a full-time employee of Orion in the
role of Managing Director. Mr Smart has sufficient experience that is relevant to the style of mineralisation and
type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person
as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves. Mr Smart consents to the inclusion in the report of the matters based on his information in
the form and context in which it appears.
The information in this report that relates to Mineral Resources has been compiled under the supervision of Mr
Sean Duggan, a Competent Person, who is registered with the South African Council for Natural Scientific
Professionals, a RPO. Mr Duggan is a Director and Principal Analyst at Z Star Mineral Resource Consultants (Pty)
Ltd, which provides consulting services to Orion. Mr Duggan has sufficient experience that is relevant to the
style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify
as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves. Mr Duggan consents to the inclusion in the report of the matters
based on his information in the form and context in which it appears.
The information in this report that relates to Ore Reserves is based on information compiled under the
supervision of Mr William Gillespie, a Competent Person who is a Fellow of the Institute of Materials, Minerals
and Mining (IMMM), a RPO. Mr Gillespie is a contract employee of A & B Global Mining Consultants which
consults to Orion. Mr Gillespie has sufficient experience that is relevant to the style of mineralisation and type
of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves. Mr Gillespie consents to the inclusion in the report of the matters based on his information
in the form and context in which it appears.
The information in this report that relates to the metallurgy and processing plant is based on information
compiled under the supervision of Mr John Edwards, a Competent Person who is a Fellow of the South African
Institute of Mining and Metallurgy (SAIMM), a RPO. Mr Edwards is an employee of METC Engineering Ltd, which
provides consulting services to Orion. Mr Edwards has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves. Mr Edwards consents to the inclusion in the report of the matters based
on his information in the form and context in which it appears.
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:
• 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).
Date: 26-05-2020 09:23:00
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