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Orion poised to give Prieska green light in second half

Errol Smart, CEO of ASX and JSE-listed Orion Minerals has told the Mining Journal Select Conference a final investment decision on whether to go ahead with development of the “high margin” Prieska copper-zinc project in South Africa is “just a few months away.”
Orion poised to give Prieska green light in second half Orion poised to give Prieska green light in second half Orion poised to give Prieska green light in second half Orion poised to give Prieska green light in second half Orion poised to give Prieska green light in second half

Orion Minerals says current resources belie potential of district around Prieska in South Africa

Richard Wachman in London

According to Orion's bankable feasibility study, released this week, the project has an NPV post-tax of A$408 million (using an 8% discount rate), and an IRR of 33%, while payback occurs 2.9 years from first production.

Smart told the conference: "We are showing a compelling investment case to establish a financially robust mine with an initial 10-year mine life with post-tax free-cash flow of A$408 million." Peak funding was estimated at A$378 million.

Smart said: "Our studies illustrate the potential of the foundation stage of the project to underpin a significant near-term, low-cost development project, with exceptional opportunities for future growth.

"There is also ample scope to significantly extend the mine life through further mining studies, drilling and exploration programs to extend the deposit, which remains open at depth and along strike.

"The huge potential for additional satellite discoveries both within the immediate near-mine environment and within the broader region provides us with a very strong project pipeline which we believe will see us operating in this district for many decades to come."

Some 9.7 million tonnes of indicated and inferred mineral resources at grades of 1.1% copper and 3.6% zinc remain outside the immediate mining plan.

In the BFS, Orion used a price of US$6,834/t of copper and $2,756/t of zinc in its modelling, with the metals currently trading at around $6,000/t and $2,500/t, respectively, and all-in-sustaining costs at Prieska put at $3,773/t copper-equivalent metal sold. Orion has a 70% stake in the project with BEE companies holding 20%.