Why has Orion Minerals changed the development plan at its flagship Prieska copper-zinc project?

The original plan for Prieska was to immediately ramp up to reach 2.4 million t/y of copper ore milled. As the markets changed, we saw a growing appetite to support lower-risk and lower-capital allocations, with an early start and slower ramp-up. Mining investors have a higher tolerance for risk, but high-capital, long lead time projects are a challenge. Instead, investors seem to prefer lower capital exposure, with slightly longer development timeframes. Driven by this reduced financing imperative, we changed our development profile. While in the initial BFS we intended to mine the historic Crown pillar of the mine (which holds over 1 million tonnes of high grade ore) at the end of the life of mine, in our revamped plan we decided to bring this to the front along with select remnant pillars. This could immediately put us on a path to earlier production of 1.2 million t/y, while we dewater the deep portions of the ore body and then ramp-up to 2.4 million t/y. Also, rather than mining the crown pillar as an open pit, with big pre-strip requirement, we are now looking to create a shallow underground operation. Moreover, we will use the tailings resulting from this operation to backfill the 1970’s era mining voids.

There are only a handful of ore bodies like Prieska around the world; its volcanogenic massive sulfides (VMS) mineralization style is the closest to Kidd Creek, the largest VMS deposit worldwide. Prieska has massive tonnage upside. Along strike and at the upturned limb of the horseshoe-shaped ore body the mineralization remains open.

How has the case for energy generation changed in your updated BFS?

The availability of renewable energy had a huge impact on both the energy security and the potential cost of energy for our mine. In our previous BFS we had placed full reliance on Eskom, the national power grid, at a cost of Rand 119 cents/kW/hour, but the cost of renewable power is quoted today at almost a third (35-45 cents) of the cost that we used in the BFS. The market is moving thrillingly fast and new doors are opening, which also means the input parameters for developing new mines need to be reviewed. The pace of change in available renewable energy sources is catching up to the pace of mine development, creating opportunities for new sources of lower cost “green” financing. Suddenly, mines like Prieska, which were already on a path to carbon neutrality, could even potentially become a net carbon sequestrator making them attractive targets for financiers looking to offset carbon credits.

What funding options are you exploring for Prieska?

We are aiming for a combination of equity and debt, but we have also secured a significant streaming finance arrangement with Triple Flag Precious Metals. This stream finance reduces our capital requirement: For an upfront investment of C$87 million, Orion committed a portion of our gold and silver by-product for the life of mine. We are exploring some innovative financing options with development finance agencies rather than just relying on commercial banks.

Could you familiarize our audience with your second project, the Okiep copper project?

Okiep has enormous upside, but it was a victim of circumstances in the past: The mine was operated by Newmont and later Gold Fields, who replaced the reserves just enough to keep production between 30-50,000 t/y, with a smelter aligned to that capacity. When Metorex later bought the mine, they only mined the immediately available reserves rather than investing in extending the mine life. Okiep is in a remote location with no nearby port or rail connection, so the complex was shut when higher grade reserves were exhausted and copper prices dropped to their lowest in a century. According to the last historic records available, Okiep held more than 50 million t of ore remaining, as well as 500 potential ore bodies identified. Orion was particularly attracted by this exploration potential: Anywhere on the site, you cannot walk more than 500 m without stumbling on outcropping mineralisation. What also peaked our interest is the intrusive ultramafic style of mineralization, similar to what we have in Australia and to our Jacomynspan nickel-copper-cobalt-platinum project. Almost without exception, these ultramafic intrusive ore bodies have a nickel and platinum rich (PGE) component. For the first time in the mine’s history, we drilled for this style of mineralisation and made a nickel discovery. Moving forward, we will be focusing on the nickel potential as well as the copper mineralization. Our strategy for Okiep is to get a small mine running and generating cash as early as possible.

What opportunities do you identify for tapping into higher-value markets?

What really inspires us at Orion is our beneficiation strategy: We see a future in the very high-value metals where micro-powders of nickel, lithium, cobalt, copper and other highly refined products play a part in the high-tech industry. This is a massive turning point for projects like Jacomynspan, with an enormous ore body containing nickel, copper, cobalt, PGMs, as well as iron and sulfur waste products. Through advanced refining technology, all these become extremely high-value products changing the whole economics of mining from bulk economies of scale to high-value and niche products. Neglected, orphan ore bodies, whose development had been sub-economic, could get a completely new lease of life. People speak about the fourth industrial revolution and the future of mining, but I believe the biggest breakthroughs will come from metallurgical application. But, explorers will need to start looking for different classes of minerals. The energy transition – and indeed our future on the planet – depend, to a great extent, on geologists finding these critical metals that will enable a low-carbon environment.