Orion Minerals boss to submit junior mining tax scheme to SA Govt in about six weeks

Errol Smart, CEO, Orion Minerals

ERROL Smart, head of the Minerals Council of SA’s junior mining desk and MD of Orion Minerals will submit a share investment scheme to Government in six weeks intended to provide tax breaks to backers of junior mining and exploration.

“We have a very serious, implementable proposal compiled by a working group of eight of the country’s top tax minds,” he said in an interview on Friday. “It’s low hanging fruit; the government would be crazy not to seize it.”

The proposal is a variation on the Canadian flow-through scheme that enables exploration and junior miners to provide investors with a tax holiday in return for their investment. Flow-through schemes have been tabled before in South Africa, but never taken up.

Smart said the benefit to government was that the delay on tax collection would be compensated through grassroots employment in regions of South Africa where poverty is high. This would create a new tax base and help decentralise wealth in the country.

Smart was commenting following Orion’s announcement it had raised A$6.2m in a share issue that enables it repay a loan to its investor and backer, the UK fund Tembo Capital, and provide it breathing space to arrange project finance for its A$413m Prieska Copper-Zinc Project in South Africa’s Northern Cape province.

The company was also buoyed by the award on Thursday of a water use right over the entire project area. From a regulatory perspective, Orion requires a mining licence over the remaining 25% of its mining right area.

Some 365 million shares were issued at a price of 17 Australian cents/share in two tranches that attracted some new investors. Existing investors also followed their rights, including Anglo American which has a position in the project through its sefa Mining Fund (AASMF), a joint venture between Anglo American’s Zimele and Small Enterprise Finance Agency, a government-owned fund.