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Orion ready to move on $400 million Prieska project


Published 12-FEB-2019 09:53 A.M.


2 minute read

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Shares in Orion Minerals Ltd (ASX:ORN) have surged 50% in the last fortnight, closing at 3.4 cents on Tuesday.

This came on the back of confirmation that a financial team had been appointed to assist in the evaluation of funding options for the group’s Prieska Zinc-Copper Project in the Northern Cape of South Africa.

Endeavour Financial will be working with management to put in place debt financing for the development of the project.

The company’s aim is to have a project development decision in place by the September quarter of 2019 with the timing on bringing the 2.4 million tonnes per annum project into production partly reliant on a bankable feasibility study (BFS) which should be released in the June quarter.

The Prieska Project total Mineral Resource now stands at 30.5 million tonnes at 3.7% zinc and 1.2% copper.

Large resource to support long mine life

Orion recently announced that the Prieska Project total Mineral Resource, reported and classified in accordance with the JORC Code (2012), now stands at 30.5 million tonnes at 3.7% zinc and 1.2% copper, including an Indicated Mineral Resources of 19.13 million tonnes at 3.6% zinc and 1.2% copper.

Adding weight to the project’s potential is the presence of Independence Group NL (ASX:IGO) on the share register with a stake of 8.2%.

Independence has a proven record of identifying value in the mining sector, traditionally making astute acquisitions of long life assets.

Orion to benefit from existing infrastructure

As a backdrop, the scoping study announced in December 2018, demonstrated an economically robust project underpinned by a large resource with substantial long-term growth potential.

Features of the study include a 10 year mining scenario with annual production of 2.4 million tonnes of zinc and copper concentrates accounting for about 75,000 tonnes and 22,000 tonnes respectively.

The project has a pre-tax NPV (net present value) of between $400 million and $440 million at a 12.5% discount rate.

Orion will benefit from some existing infrastructure in place from previous mining projects.

Given the company’s market capitalisation of $64 million, it is punching above its weight with few peers of that size being able to boast such a large project, albeit at a relatively early stage.

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S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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