JSE-listed Orion Minerals reports that positive results from ongoing value engineering and optimisation studies on the Prieska Copper-Zinc project are currently being incorporated into an optimised bankable feasibility study (BFS).The company is a mineral explorer and developer set to join the ranks of international base metal producers through the development of its flagship Prieska project in South Africa’s Northern Cape province. It said that the optimisations expand and improve the already compelling BFS financial case for the Prieska project, that was initially released on 26 June 2019. The company is also progressing negotiations with various parties to secure the total funding requirements for the development of the 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 offtake. “Several expressions of interest have also been received from potential strategic investors, who are interested inpartnering via significant equity participation in Orion’s mine operating subsidiary companies. These discussionswill be progressed in parallel with the project finance negotiations,” the company said in a statement. Feasibility Study Optimisation Process Orion Minerats explains that 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. 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.
Further to the recent announcements, value engineering and optimisation work has continued since the completion of the BFS. 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. The optimised and updated BFS is now due for completion in Q1 2020, with the expectation of reduced preproduction capital and thus financing requirement. Meanwhile, 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 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 MD and CEO, Errol Smart, said that 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 returns.”