Orion hoping to finalise JV partner for R3.73bn Prieska Copper-Zinc project by Q3

ORION Minerals hoped to sell a stake in its Prieska Copper-Zinc project situated in South Africa’s Northern Cape province by the third quarter of this year after formally initiating an assessment of offers it described as “unsolicited”.

Whilst development of the project, slated to cost A$378m or some R3.73bn, did not turn on attracting a partner, Orion said a third partner would help minimise dilution for its shareholders. After flagging the possibility of introducing a joint venture partner in December, discussions had now taken place, it said.

“We believe that identifying and engaging with the right partner could help us to unlock the full potential of this world-class deposit and ultimately deliver an integrated funding and development package that will minimise dilution for Orion shareholders while retaining significant exposure to the substantial cash-flows that will be generated by a long-life base metal operation,” said Errol Smart, MD and CEO of Orion Minerals in a statement.

“We have already held discussions with a number of parties that could bring technical, financial, corporate and strategic expertise to the table,” he said.

Orion Minerals published a bankable feasibility study (BFS) in June which it set down plans for a “foundation” 10-year production period in which some 189,000 tons of copper and 580,000 tons of zinc would be produced. Peak funding would be A$378m with a payback of just under three years and an all-in sustaining margin of 44%.

It hoped to produce an optimised feasibility study in which it would set down plans for an expanded operation. This would be completed in the second quarter shortly before potentially tying up a deal with a partner.

Orion said previously it had also received several proposals for provision of mezzanine debt as well as equity investment at asset level from parties interested in securing future product off-take.

Commenting on the optimisation of the BFS last year, the company said “positive results” from engineering and optimisation studies were being incorporated into the BFS. “The optimisations expand and improve the already compelling BFS financial case for the Prieska Project, that was initially released on 26 June 2019,” it said.

Orion has engaged Macquarie Capital to act as the Company’s financial adviser in relation to the transaction.

“We are looking forward to engaging formally with these and other parties over
the coming months to see if we can crystallise a transaction that would generate a positive outcome for all stakeholders, and help to fast-track the development of a substantial new-generation African base metals mine,” Smart said.