Could you bring our audience up to date with the latest developments at your flagship Prieska copper-zinc project in South Africa?

After completing the BFS in 2020, we were planning to go the traditional financing route of normal debt and equity, which can be very challenging for a junior in the South African environment. Looking for alternatives to unlock the value of Prieska, Orion came up with a different strategy that relies on a “go small to grow big” mantra. Changing our development profile allows us to go into production in the next nine to 12 months, whereas in the original BFS, we had envisioned three years of construction for the massive 2.4 million t/y underground copper ore operation. With the current plan, we can reach the same production threshold within five years, while generating cash, so it is about being more opportunistic and grabbing the low-hanging fruits. On this basis, we secured funding from South Africa’s Industrial Development Corporation (IDC), as well as a streaming agreement with Triple Flag, which means the trial mining exercise is fully funded. With this, we will do feasibility optimization to test for different mining methods and determine the initial scale of the starting operation.  

Could you elaborate on the recent financing drawn by Orion?

As a parastatal institution, IDC became an important partner not only for Prieska but also for our second project, Okiep, where IDC took an early-stage risk with a 43.75% stake. Given the criticism surrounding South Africa’s sovereign risk profile, having the state (essentially) backing the project gives foreign investors a certain comfort of jurisdictional risk mitigation. On the equity side, Clover Alloys Group, a well-seasoned investor in South Africa, became a cornerstone shareholder of Orion, supporting our view of starting small, leveraging that cash flow, and then growing the business. Other existing shareholders like private equity firms Tembo Capital and Delphi Group matched Clover’s subscription. We raised a total of A$13 million dollars in equity. Besides, we put in place a back-to-back finance agreement with options that could see us raise another A$60 million. As for the agreement with Triple Flag, we find the streaming model attractive because it is not as dilutive for shareholders and it takes away the burden of servicing debt interest. Similar to equity shareholders, streamers take on project risks alongside the operator, sharing the payoffs when the mine is producing. 

What kind of synergies are you exploring between Prieska and Okiep? 

Prieska and Okiep go nicely hand in hand, sharing similar mining methods, requiring the same equipment and consumables, and falling into the same supply chain structure. The two projects are 700 km apart, but procurement and logistics can be organized remotely between the two. With a centralized management, logistics, accounting, and auditing teams, the teams on the sites can focus on mining. 

Prieska currently has a JORC Mineral Resource of 31 million t @ 1.2% Cu, 3.6% Zn VMS (volcanogenic massive sulfides) resource. Could you give us a sense of the regional upside potential? 

The Areachap belt has enormous upside potential. The most exciting project we have been nurturing for some time is Jacomynspan, which is a massive ore body with Ni-Cu-PGE-Au mineralization. We only drilled about 1/7 of the total outcropping ore, and this alone is already 65 million T JORC Resource. But more than exploration, what we are focused on the technology advances to efficiently harvest this sulfide nickel material, which in the past was a metallurgical challenge.

South Africa was placed at the bottom of the Fraser Institute rankings. What is your view of this negative perception?

The Fraser Institute report is a perception index; it is subjective and relative to experiences, often driven by the perception that “it is easier next door.” That said, I think there is a lot of frustration coming from unfulfilled promises in South Africa, such as an effective mining cadastre (still lacking today). At the same time, South Africa is the world’s biggest producer of platinum, chrome, and manganese, and overall, an extremely prospective jurisdiction. South Africa is not unplayable, but it requires a unique breed of management people to operate it. 

Do you have a final message for our audience?

Orion Minerals is rebooting significantly, no longer being a pure explorer; with that, we have a new management team being assembled, which brings a specific set of technical operating skills. It is a very exciting time for the business!