This article has been corrected to show the placement with a lender was at a premium, not a significant discount as previously reported.
ORION Minerals, one of a few publicly listed companies exploring for metals in South Africa agreed with one of its long-standing lenders to extend a A$6m bridging loan four months to September 30 so it could use funds for exploration instead of debt service
Tembo Capital Mining Fund II agreed to extend the bridging facility from its due date today after having a year earlier subscribed, through an affiliate, for 73 million Orion Minerals shares at an issue price of some 2.4 Australian cents/share. This transaction was done on March 10 last year at a significant premium.
The mining fund is operated by Tembo Capital, a private investment firm headquartered in the UK and run by a team of UK and Australian investors with mining, financial and geological industry backgrounds. Tembo Capital extended the bridging facility in order to allow Orion undertake a capital raising at a later day. The company now has four months to do that having already won an extension in mid-December last year.
Orion Minerals said last year it intended to raise A$5.5m through a placement. Since then, it sold shares to Australian-listed Independence Group enabling the latter to lift its stake in Orion Minerals to 11.1% from 4.2% previously.
Orion said in its statement that the extension of the bridging facility would help it prioritise spend on the redevelopment of its “flagship” property, the Prieska Zinc-Copper Project in the Northern Cape province. Orion recently reported a maiden JORC-compliant total mineral resource of 29.4 million tonnes containing 1.13-million tonnes of zinc and 365,000 tonnes of copper at the prospect.
Its next step will be to complete a bankable feasibility study, which is targeted for the fourth quarter of this year.
The timing is good for the metals Orion wants to mine. In the past two years the spot nickel price has surged over 50% to almost $14,500/tonne from about $8,500/tonne. In a presentation to the Bank of America/Merrill Lynch Global Metals, Mining and Steel Conference earlier this month, IGO CEO Peter Bradford said nickel was expected to gain from market disruption by electric vehicles, with an estimated supply deficit of 167,000 tonnes this year.
By 2025, an additional 300-900,000 tonnes of nickel a year would be needed.
