Orion to announce capital raising plans next week, requests share trading halt

Orion Minerals: Prieska zinc-copper project

TRADING in Orion Minerals shares has been halted following a voluntary request by the company ahead of “a material” announcement related to funding.

“Orion anticipates making a material announcement in relation to a proposed capital raising,” the company said today. More details are likely on June 15, it added.

The company could do with getting more runs on the board for its copper production plans in South Africa’s Northern Cape. Shares in Orion are down a third on a 12-month basis despite its positioning in the copper market where the outlook is bullish. Copper is trading at about $9,700 per ton.

Orion said in January that it would undertake a six month feasibility study to assess whether it can begin early production from its Prieksa Copper-Zinc Project in South Africa’s Northern Cape. Discussions with lenders to finance the plan were underway.

The study will also weigh up the extraction of remnant underground pillars in the previously mined orebody as well as the dewatering of the Prieska Deeps section of the mine in preparation for its eventual mining.

In terms of a feasibility study on the Prieksa Copper-Zinc Project in 2020, in which an estimated capital cost of A$432m was concluded, the open pit was to be mined last. But the aim now is to take advantage of current high base metal prices.

“Investors visiting the site said we were crazy for mining the open pit last when it could be mined sooner. The one certainty is the copper price is going to be flying,” said Errol Smart, MD and CEO of Orion Minerals at the time of the January announcement.

These investors hold equity finance which would be pumped into the project first in any event. Senior debt finance would come later and perhaps less than scoped as Orion would be generating cash flow by the time it was needed.

The expectation is that the open pit will deliver 100,000 tons a month in ore to a plant yielding 200,000 tons of metal concentrate a year of which about 60,000 to 70,000 tons is copper concentrate annually. For production from the open pit, one of the two sulphide processing plants envisaged in the project’s feasibility study would be commissioned.

Additionally, tailings material from mining of the Prieksa Copper Zinc Project open pit will be used as backfill for the ‘voids’ in the underground workings of the Prieska orebody enabling the removal of the remnant pillars left by previous miners as support.

Goldman Sachs said it remained bullish about the future trajectory of copper. “We continue to see copper prices as substantially under priced given persistent tightening micro trends in China even through lockdowns,” it said in a recent report.