Orion targets A$20m capital raise to complete early production study of Prieska mine

ORION Minerals said it had raised A$6m through the issue of new shares in two tranches whilst a third tranche was being prepared that would take the total capital raised to A$20m – enough to underpin early production from its Prieska Copper-Zinc Mine.

Critically, the funds will enable Orion to tap into a US$87m finance deal with Triple Flag Precious Metals, a Canadian company, a streaming and royalty company. In terms of that deal which was unveiled in May, Orion will secure US$80m in funds in return for 84% of future gold and silver by-product from Prieska Copper-Zinc Mine.

In today’s capital raising announcement shares will be issued to “sophisticiated and professional investors” whilst Orion will also offer a share purchase plan in order existing shareholders in the company can participate in the offering at the same price.

Orion requested a trading halt on June 10 ahead of finalising the capital raising. A deterioration in the global market however means that uncommitted investors require more time in terms of the prepared third tranche investment.

Errol Smart, CEO of Orion Minerals, said he was gratified by the investment market support. “Considering the events that have unfolded in global financial markets since we entered a trading halt on 10 June we are very pleased with the support,” he said. “While financial markets have been in turmoil recently, we share the view of many experienced commentators that the broader battery metals thematic has not gone away.”

Orion said in January it would undertake a six month feasibility study to assess whether it can begin early production from its Prieksa Copper-Zinc Mine, which is situated in South Africa’s Northern Cape province.

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.

Issue details

The funds raised would be used principally for the development of the Prieska mine, including the dewatering and completion of the early production feasibility studies, the company said.

Some 156 million Orion shares will be issued at two Australian cents apiece – equal to about 22 South African cents/share – raising $3.1m in terms of tranche one. In the second tranche, 145 million shares will be issued at the same price. Both tranches have 151 million options attached consisting of an option for every two shares issued. The options can be exercised at a price of A$0.25c/share until June 30, 2023 – the expiry date.

In terms of the third tranche, up to $14m will be raised equal to 699 million shares at A$0.2c/share provided shareholders approve the issue at Orion’s annual general meeting, scheduled for August. There are no options attached to tranche three, although Orion stated it would accept over-subscriptions.

The share purchase plan enabling existing shareholders to buy Orion shares at the same price as the capital raise will open on June 28. Shareholders can buy packages of Orion shares from a value of A$2,000 to A$30,000, the company said. Up to 150 million shares would be issued in total.

“The prices of copper, zinc, nickel and other future-facing metals are still very strong – and underlying demand from the renewable energy and EV (electric vehicle) sectors continues to increase, and will do so for many years to come,” said Smart.

“With advanced, near-term production assets in one of the world’s best mining jurisdictions, the Northern Cape, Orion stands ready to play a key role as a supplier of these metals,” he said.