By Nelendhre Moodley
Base metals developer, Orion Minerals, is ramping up activities at its flagship asset, Prieska Copper Zinc-Mine (PCZM) in the Northern Cape, as it eyes production in the next 12-18 months. Having recently awarded a six-month trial mining contract to Newrak Mining, the junior miner is eager to validate the results from its feasibility study, with CEO Errol Smart, upbeat that the trial mining results will be highly favourable.
Following the challenging investment environment, the diversified metals explorer has revised its strategy to “start small to grow big”, which allows Orion Minerals to achieve early production and become cash generative quicker than initially anticipated.
“Following changed global macroeconomics, increased interest rates and the high cost of debt, we took a decision to grow our production incrementally. By starting at a reduced-scale first phase and a phased build up towards 2.4 million tonnes per annum means that Prieska will have a shorter lead time to first concentrate production, a smaller upfront funding requirement, and can start generating cash early.”
Located in the Northern Cape Province, the Prieska Project was historically mined by Prieska Copper Mine (PCM), a subsidiary of Anglovaal Group, between the 1970s and 1990s, however, following a dip in demand for copper and zinc, the mine was closed in 1991. Since its acquisition of the Prieska mine in 2017, Orion Minerals has been taking the project up the value curve and completed an updated Bankable Feasibility Study (BFS) in May 2020.
The BFS is based on the development of a modern 2.4 mtpa underground and open pit mining operation, with a 12-year ‘Foundation Phase’ targeting 22 000 tpa Cu and 70 000 tpa Zn.
The project contains a Volcanogenic Massive Sulphide resource totalling 31 mt at 1.2% Cu and 3.6% Zn, including an Indicated Mineral Resources of 19.13 mt @ 1.18% Cu and 3.59% Zn.
Orion Minerals has since secured over R371 million in pre-development funding from South Africa’s Industrial Development Corporation (IDC) and streaming royalty company, Triple Flag, and recently received firm commitments from Clover Alloys for a A$13 million strategic funding package. These investments have helped to accelerate the development of the company’s two base metal production hubs (Prieska and Okiep).
Prieska’s path to production
Given the strong demand for base metals, which underpin the global clean energy drive, Orion Minerals is eager to dovetail valuable copper and zinc ounces to the “imminent” supply deficit.
“We have a strong belief in the rising metals market, particularly for the critical metal’s suite of copper, nickel and zinc. As it stands, there are insufficient copper mines being developed currently to meet the projected supply gap which means that when Orion Minerals brings the Prieska mine into production in the next 12 to 18 months, we will be in a position to take advantage of favourable metals prices,” says Smart.
The ASX-listed entity recently awarded a six-month trial mining contract to P2 Mining, a subsidiary of South African mining contractor Newrak Mining Group (Newrak), to undertake an early works trial underground mining programme at the Prieska Copper Zinc-Mine.
The trial mining will target the +105 Level Crown Pillar, using conventional load-haul-dump and alternative mechanised underground mining methods. The process will comprise 120 m of footwall ramp development with ore development along strike for 300 m on the primary access in a cut-and fill mining cycle.
According to Smart, mining contractors and key equipment arrived onsite in mid-September to begin trial mining with the aim of sub-sampling and then stockpiling the mined ore on surface.
The programme ahead also entails metallurgical testing on mined material followed by possible installation of a pilot processing plant onsite.
The pilot plant is expected to process 30 000 – 40 000 tpm, with the miner adding modular plants as production ramps up to 200 000 tpm (2.4 mtpa) in five years, by when it will be producing 22 000 tpa copper and between 60 and 70 000 tpa of zinc.
The production efficiencies achieved during trial mining will inform the revised feasibility study, which will be published early next year and inform Orion Minerals’ plan of execution as it ramps up to full scale production. Moreover, the company is in talks with potential contractors for the implementation of a Build Own Operate model.
“Five years from now we expect to achieve the original bankable feasibility production profile that we originally set out to achieve,” says Smart, who explains that one of the pre-requisites of being funded by the IDC is the need for independent verification by experts before sign-off on the feasibility study.
“This will unlock the next tranche of project financing and enable Orion Minerals to progress project development.”
Meanwhile, the company welcomes the benefits associated with resuscitating the brownfields operation, which is accompanied by well-established large scale infrastructure including water pipelines, grid-power, shafts, declines, roadways, accommodation and a rail line 40 km from the site, as it saves Orion Minerals on hefty infrastructure outlay.
“As a brownfields site – with the benefit of existing primary infrastructure and services including grid power, water and decline roadways to access the drilled mineralisation remaining from an era of mining with very low metal prices – the barriers are substantially lowered for redevelopment,” says Smart.
However, the challenge for Orion Minerals lies with the fact that the Prieska mine is currently flooded to about 275 metres below surface. Following the mine’s closure in 1991, rain run-off has accumulated over the past 30 years, which means that pumping out the amassed water is a key undertaking lined up for the junior miner.
Further to this, the company is developing ventilation for underground mining and establishing refuge chambers and underground electrical feed.
Strong on ESG
Smart notes that following the company’s significant investment on aspects related to tailings management and water use management, it has realised several high-tech engineering solutions.
“Our prudent water management and water discharge management solutions are pushing the environmental, social and governance side of our business a notch higher. In fact, on the back of our attention to ESG, Triple Flag – which demands adherence to the highest ESG standards – awarded us project financing. Our business philosophy is underpinned by our drive to meet high ESG standards and we work closely with our stakeholders and the community in which we operate to ensure we leave a positive environmental footprint.”
Further to this, in making the jump from explorer to producer, Orion Minerals has changed its management team to reflect its changing dynamics – bulking up its staff with engineers, and specialists in environmental management, metallurgy and logistics, amongst others.
“We have identified people with specific skills sets that understand the kind of mining we do. In fact, we were fortunate that Newrak Mining’s team has a production manager who previously worked on the Prieska mine when it was in operation 30 years ago which means that coupled with his modern mining skills, he has an intimate understanding of Prieska’s operating environment and ground conditions.”
Orion targets a pipeline of profitable initiatives
The globally diversified emerging miner was recently granted a further five new ‘copper ore’ and ‘tungsten ore’ areas to the Okiep Copper Project (OCP), located in the Northern Cape Province which increases its tenement holding west, south and east of the central Southern African Tantalum mining right area by some 30 000 hectares.
The additional areas open up a number of exciting opportunities for Orion Minerals to explore for potential copper and associated minerals to supplement the Flat Mines Project, currently undergoing an Independent Expert’s Review of the Bankable Feasibility Study.
“The ability to operate several individual mines within a twenty-kilometre radius under a central management hub brings economies of scale and lends flexibility with multiple production sites, each accessible via a well-established network of roads.”
In addition to advancing its Okiep mine, Orion Minerals is also investigating opportunities to unlock further value from its flagship asset.
“We have been seeking complementary opportunities from our portfolio of existing assets, including prospects from our by-products. For instance, there is currently enormous demand for high quality, clean pyrite. As much as 10% of our ore contains clean pyrite and we have already received several inquiries in this regard. At the moment, clean pyrite trades at over $200/t FOB.”
The Prieska mine is also renowned for its byproduct content of barite – a mineral, which is on the US critical minerals list, used in the oil and gas drilling process.
“Following the recent massive oil and gas discovery in offshore West Coast South Africa and in Namibia, and given the looming demand for good quality barite, we believe we have a valuable byproduct on-hand that will significantly lift our profitability,” concludes Smart.
