ORION Minerals raised A$11m (R110m) in a share placement and swapped debt for equity with a lender in a development the firm’s chairman said represented a “… change in investment grade”.
“We are delighted with the support received from new and existing shareholders and welcome a number of new institutional investors to the register,” said Denis Waddell in a statement regarding the placement. “The quality of support for the placement signals the change in investment grade of the company as it moves closer to its production goals.”
Orion Minerals is exploring in South Africa’s Northern Cape where it is principally working on a bankable feasibility study about reopening the Prieska Zinc-Copper mine. The feasibility study would be complete by the end of 2018 or early 2019, the company said.
For a junior miner – the company is currently capitalised in Sydney where it has its primary listing at A$57m – Orion is highly cashed up. It recently sold Australian exploration tenements to Evolution Mining for A$2.5m and placed shares worth A$5m and A$6.3m to Independence Group and Tembo Capital respectively.
The shares in the placement announced today will be issued at 3.7 Australian cents each in two tranches: 91.6 million in the first using 15% of the company’s placement capacity; and a second requiring the support of shareholders at a general meeting planned for early August in which 205.7 million shares will be issued raising A$7.6m.
The agreement with Tembo Capital is that the company subscribe for A$6.3m in shares in Orion Minerals at 3.6 Australian cents per share which all but wipes out debt held with the company, and increases Tembo’s stake in Orion to 22.99%.
“We look forward to putting investors funds to work,” said Errol Smart, MD and CEO of Orion Minerals. “Our primary focus is Prieska, however, given the quantum of funds raised under the placements, we are also in the fortunate position of being able to invest in the exploration of our highly prospective landholdings that present significant potential further upside for shareholders,” he added.
A third part of the transactions announced today is for Waddell to subscribe for 6.8 million shares at the same issue price as the Shares being offered under the placements in order to raise an additional A$250,000.
The capital raise is remarkable given the paucity of new investment in South African mining even amongst established mining companies with less risk.
Orion recently reported a maiden JORC-compliant total mineral resource at the Prieksa zinc-copper prospect of 29.4 million tonnes containing 1.13-million tonnes of zinc and 365,000 tonnes of copper at the prospect.
