A Government of national unity (GNU) bodes well for the country, Errol Smart of dual-listed copper development company, Orion Minerals’ CEO, told attendees during a South Africa-Australia webinar in June. The company is fast-tracking the development of its flagship Prieska Copper Zinc Mine and advancing its Okiep Copper project, both located in the Northern Cape.
According to Smart, the recent elections, which culminated in a GNU is a “South African story that is going to get superheated over the next couple of weeks. Coupled with our copper story, which is underpinned by a macro environment where everything is positive and where interest rates are likely to fall and the local currency, the Rand, dramatically strengthen, means we have certainty in our medium-term outlook. For junior miners in South Africa, the sun is finally shining on us.”
All of which bodes well for Orion Minerals, which is on the cusp of taking its flagship Prieska Copper Zinc Mine (PCZM), up the value curve and into construction in the next six to eight months as it targets production in late 2025.
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 updating the resource and completed an updated Bankable Feasibility Study (BFS) in May 2020.
The project has access to significant local and regional infrastructure and is fully permitted and in the final leg of completing an optimised bankable feasibility study, scheduled for handover to independent experts by August.
Discussing the current status of the project, Smart says trial mining has been underway for some time, with 160 people on site drilling and blasting daily and about 30 000 t of ore already on surface.
“We will be using the outcomes from the trial mining to enhance the optimised bankable feasibility study,” says Smart, adding that the company is also finalising the bankable feasibility study on its Okiep project.
Orion Minerals is in discussion with several finance organisations, including debt and equity financiers and financiers involved in innovative off-take related financing, to secure funding of an estimated R3-billion to R4-billion.
“Off-take partners are increasingly playing a significant role in financing mining projects worldwide. In fact, we are in discussions with off-takers, both on off-take terms and as potential providers of project financing. Those that provide financing will get preferential attention on the off-take as we go forward. We expect to be engaged in financial agreement negotiations for roughly the next six months,” says Smart.
Prieska project
Orion Minerals BFS, completed in 2020, 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.
“There are very few opportunities in the world where mines that are fully permitted, can come into production in 12 to 18 months, and have a big growth profile ahead of them. The Prieska mine is a Brownfields project that was a large mine in its time, equipped with a 3 million tonne per annum processing plant. The project has significant infrastructure in place, which currently underscores project acceleration.”
The Prieska orebody was initially mined from 105 m below surface all the way down to 1100 metres. The existing shaft, which descends to 1 100 m, has multiple underground roadways that reach down to the deepest ore at 1 250 m.
The company’s development strategy, while dewatering is underway, focuses on a mining plan that targets mining shallow underground reserves, the open pit and remanent pillars. Trial mining has confirmed the ability to mine with a mechanised fleet in large scale excavation to provide economies of scale for extraction.
First production is scheduled for end 2025.
Mitigating infrastructure challenges at Prieska
As it stands, Orion Minerals, which needs to pump out nine million cubic metres of water before the company can begin underground mining from the deepest ore, has the requisite pumps in place draining out the excess water. “We are currently mining underground on 105 level, above the water level which is at 265m,” says Smart, adding that the dewatering programme is a three-year programme that will entail pumping at 500 cubic metres of water per hour.
“The pumps we installed were tested in mid-June to run at 600 cubic metres per hour. Once the Eskom grid power is connected, we will start pumping at 500 cubic metres per hour.”
The miner has also installed flood control measures to avoid unplanned mine flooding for events such as a “one in a hundred-year rainfall”.
A retention dam, currently under construction, is scheduled for completion in July, with the miner set to acquire an off-the-shelf, plug and play rental reverse osmosis plant, which Smart explains will be operational next year.
Aside from constructing a four-kilometre water pipeline, other infrastructure installation is underway, including power supply from Eskom, which recently installed a 15 MVA grid power supply system to run the operations.
Although the junior miner “dreams of one day having its own smelter”, the exorbitant cost does not currently justify building a smelter, says Smart.
Looking ahead, he says that instead of a traditional high energy consuming smelter, the company is leaning towards other more environmentally friendly options, including metal vapour refining.
“We’ve done a lot of work on metal vapour refining and we’re doing a lot of work on hydrometallurgical leaching. It’s difficult to build an environmentally friendly smelter, but it is quite viable to build an environmentally friendly metal vapour refinery or leach plant, and that›s what we will probably look at in the future.”
On a positive note, the Prieska project is located close to key transport routes in the Northern Cape, including being 43 km away from a rail siding, and has good road infrastructure close to the mine, including toll roads.
Strong currency bodes well for Prieska’s construction phase
With the South African Rand projected to strengthen in the coming weeks, Orion Minerals remains upbeat, stating that this is good news for mining projects preparing for construction in South Africa.
A strong currency is favourable for miners looking to construct mining projects, as contractors will be able to leverage off the strong rand when acquiring machines, equipment, tyres and fuel and associated construction costs.
Smart explains that all these items are highly sensitive to currency fluctuations and having a strong rand “is the best thing we could ask for” as the company readies to acquire equipment and machines. “We will need to convert Rands to Euros, Dollars, and the Yuan to purchase capital goods and are upbeat when the Rand is strong. Moreover, from a financial point of view, the markets and the banks yearn for currency stability.”
Advancing the green agenda
Even though the Orion Minerals Prieska project is on the Eskom grid, the miner is in talks with several independent power producers as it looks to ink renewable energy agreements for its projects.
“We are in advanced discussions with a few renewable energy power producers, with one in particular, presenting terms which are 20% lower than the cost of Eskom power. Inclusion of renewable energy will mean that we will be producing certified green copper. That’s a huge opportunity, especially when speaking to off-takers and debt financiers where green and ESG, credibility is very important.”
Further to this, the pumped water from the mine offers the company an option to process some of the water for mine use and extract the brine, which it will store for future use in fertiliser production.
“We concluded a study on the viability of producing fertilizer from brine which indicated that such an initiative is not only technically and commercially viable but would add roughly $100 million to our coffers.”
The ASX-listed entity is also in discussions with the local farmers’ cooperative as it looks to ink an agreement for its pumped water.
Okiep project
Meanwhile, in tandem with developing the Prieska project, the company is advancing the Okiep Copper Project (OCP) located in the Northern Cape, roughly 450km west of the company’s flagship Prieska project.
The Okiep project, which produced nearly 2 million tons of copper historically and waspreviously owned by Newmont and Goldfields, offers Orion Minerals a significant opportunity to develop a second base metal production hub alongside its Prieska project.
As it stands, the Okiep project is almost fully permitted, with the water-use licence and sign-off on the engineering design of the tailing’s facility, being the two outstanding components.
“We started the application for the water-use licence process about three years ago and have been told that final sign off is imminent.”
Since acquiring the Okiep project in February 2021, Orion Minerals has undertaken a Scoping Study which has confirmed the economic merits of developing a foundation-phase mining operation based on an initial six deposits.
“Orion acquired about three quarters of the district which produced copper at an average grade of 1.9% cu. For many decades, it produced more than 20 000 t/y of copper from its plant facilities.”
Importantly, Orion Minerals recently drilled one of the highest grades intersections on the Okiep project where it received 50 m at 5% copper. “There’s high-grade ore here that hasn’t been mined, and we’ll be proving it as we go.”
The company is in the process of completing a bankable feasibility study on the Okiep project and, according to Smart, the project area is extremely attractive, consisting of 42 known mines within the district.
“More than three quarters of those mines are on our properties. Exploration is ongoing, the BFS is almost complete.”
Copper outlook
A new copper cycle is emerging, underpinned by constrained copper supply owing to a lack of new mine development and countries investing heavily in clean energy.
According to Smart, Sprott, which is a leader in precious metals and critical materials investments, is also “busy buying into physical copper’.
“We are seeing that Sprott, one of the big investors funding mining equities and providers of debt financing, is now buying into physical metal-based stocks. Furthermore, with the world actively working towards ‘cleaning up its act’, companies are investing heavily into clean energy and green energy, with all of which rely heavily on the use of copper. I foresee demand for copper continuing to remain robust and more mines coming online to meet the projected demand,” concludes Smart.
