Orion Minerals heads for capital market as share doubles in a year

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Errol Smart, CEO, Orion Minerals with Prejelin Naggan, head of primary markets, JSE

ORION Minerals opted to raise capital earlier rather than later after announcing today its share had been suspended ahead of an announcement regarding the finalisation of capital raising.

The firm, which is digging for zinc and copper in South Africa’s Northern Cape province, had in late May struck an agreement with a major shareholder to extend a bridging loan to September so its available funds could be used for exploration expenses.

Shares in Orion Minerals on the Johannesburg Stock Exchange are double their level of 12 months ago. At some 50 South African cents, the company is capitalised at R695m.

Speaking to Miningmx earlier this month on the sidelines of the Junior Indaba, a mining conference, Errol Smart, Orion Minerals MD and CEO, said the company had received extremely good support from shareholders. As a result there was no pressure on the balance sheet.

“Having certainty about our financing has enabled us to deploy the capital we have fairly rapidly. Because we knew we had capital, we could deploy it quickly which has helped us to define a world class deposit,” he said.

He added that the extension of the bridging finance – and the fact the firm had debt – was a clear indication of the quality of its principle prospect, the Prieska Zinc-Copper Project. “The shareholders offered debt in the first place because they were certain they’d benefit,” he said. Tembo Capital Mining Fund II, a UK-headquartered investor, extended the bridge. The firm also has Independence Group, an Australian-listed firm, as a shareholder. Anglo American is also a preference share investor at the project level.

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.

 

3 COMMENTS

  1. It’s exciting to see Orion trading at a premium of between 50% and 250% on the JSE vs the ASX price.

    Smart must just find the buyer who’s willing to buy these fancy premiums and all his funding needs will be sorted for ever.

    • “must just find the buyer” and “all his funding needs will be sorted forever” – yes, indeed! Wouldn’t that be splendid, old chap! The solution to all of our problems – world peace, too!

  2. This is exactly why the market is sceptical of Juniors. And why those regulations, checks and balances are so necessary.

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